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POPULISM 


HERMON W. CRAVEN. 


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PRICE, 25 CENTS. 










ERRORS OF 




HERMON W. CRAVEN. 

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SEATTLE: 

LOWMAN eSc HANFORD S. AND P. CO., PUBLISHERS. 

1896. 






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I 


Copyright, 1896 

BY 

Hermon W. Craven. 











PREFACE 


The main purpose of this book is to call attention to 
a few of the many errors and misrepresentations re¬ 
garding our financial history with which Populist 
books and pamphlets and speeches abound. 

To a great extent the Populist books and pamphlets 
that have been scattered broadcast all over the land 
for years past are made up of statements intended to 
fill the minds of the readers with error and prejudice. 
It is difficult enough to form correct theories from facts 
known just as they are. Theories and conclusions de¬ 
rived from supposed facts must inevitably be wrong; 
and this accounts for manv of the wild and visionary 
notions of Populists. Where people have not had ac¬ 
cess to reliable sources of information these pamphlets 
and books have done much to mislead those who really 
desire to form correct political theories. And there 
are many worthy men in the Populist party who would 
leave it could they learn the positive truth in regard to 
the historical facts which have thus been distorted and 
even falsified. 

At the end of each chapter references are given so 
that the reader may investigate, and see for himself 
that I present correctly the teachings of Populism as 
set forth by representative party leaders. 

There are also references to some of the standard 
historical and financial works, and government re¬ 
ports, which sustain my statements and arguments. 

Respectfully, 

HERMON W. CRAVEN. 

Seattle, Wash., July 4, 189G. 



# 


ERRORS OF POPULISM. 


5 


CHAPTER I. 

CAPITALISTS IN 1860-61. -WERE THEY ROBBERS OR 

PATRIOTS?-THE SEVENTH REGIMENT OF NEW YORK. 

-THE $1 50,000,000 LOAN. 

Throughout the Populist literature there is an ef¬ 
fort to inflame the minds of the people, especially the 
laboring classes, against the rich by false statements 
regarding the position that the moneyed class of the 
North, especially the capitalists of New York, as¬ 
sumed in 1860 and 1861. 

It is claimed that when war seemed imminent; 
when the minds of the people generally were filled 
with dismal forebodings; when mothers on bended 
knees were praying that the storm cloud of war might 
pass, the capitalists rejoiced in the prospect; and that 
when the dreaded crisis came they refused to loan 
money to the government except at a rate of interest 
ranging from 24 to 36 per cent, per annum, were lack¬ 
ing in patriotism to the last degree, and were a greater 
enemy to the country than were the rebels in arms. 

That this is a fair statement of Populist teaching 
can be verified by reference to Emery’s “Seven Finan¬ 
cial Conspiracies,” which is the most widely circulated 
of all Populist books, and universally admitted by 
Populists to correctly represent their views. After 
telling of the general dread of war, it speaks of the 
capitalists as follows: 

(1.) “But above all the prayers, wailings and forebodings. 


6 


ERRORS OF POPULISM. 


the attentive listener could hear from Wall street the echoes 
of jubilant satisfaction and harmonious preparations for an 
onslaught upon ihe industry and prosperity of the country. 

* * * Do you ask why their hearts became like steel, and 
their thirst for human gore insatiable? Why human life had 
lost its sacredness and the thunderings of the war trumpet was 
music in their ears? * * * They rejoiced because they saw 

in the preparation for war their long coveted oppportunity for 
plunder. * * * Neither American nor foreign capitalists 

would loan money to the government upon any reasonable 
terms. * * * We learn that the money kings of Wall 

street graciously tendered loans to the government in her dis¬ 
tress at from 24 to 36 per cent, interest. * * * Knowing 

the necessities of the government, these Shylocks determined 
to persist in their demands, for they had planned through the 
misfortune of the government to enrich and aggrandize them¬ 
selves. This was why they rejoiced while others wept, this was 
why the tidings of war brought gladness to their hearts.” 

And in other Populist books (2) the assassination 
of President Lincoln is charged to the “money power.” 

It is the purpose of this chapter to show that this 
teaching of Populism is absolutely false, and that, at 
the time mentioned, the capitalists of New York and 
other cities came grandly to the support of the gov¬ 
ernment and set an example of patriotism for the 
whole country to follow. 

Within six hours after the news was flashed to New 
York that the Sixth Massachusetts regiment had been 
stoned in the streets of Baltimore a regiment marched 
through the streets of New York to take the train for 
the defense of Washington City, then in imminent dan¬ 
ger of capture by the rebels. No regiment that left 
the city 7 during the dark years to follow attracted the 
attention or excited the popular demonstration that 
marked the departure of that one. It seemed as if all 
the vast population of the metropolis had gathered 
along the line of march. The streets and pavements, 


ERRORS OF POPULISM. 


7 


the windows, and even the roofs of the houses, were 
crowded with people aroused to the highest pitch of 
patriotic enthusiasm. Amid the waving of flags, the 
strains of martial music, and the ceaseless cheers of 
countless multitudes, the Seventh Regiment of New 
York City, 1,000 strong, started for the front. Those 
men knew they were not going to any holiday affair. 
It was after the echoes of Sumter’s guns had reached 
the remotest hamlet and warned all men that the great 
struggle for the nation’s life had actually begun. 

The example was contagious. Regiment after 
regiment followed in quick succession, and within ten 
days fully 10,000 men of the city of New York were 
on the march toward the capital. 

The Seventh was the tirst regiment that the great 
Empire state offered in defense of the union. 

Who made lip that regiment? 

Beyond dispute, it was composed largely of young 
men from the wealthy families of New York city (3). 
In other words, the first ones in the state who re¬ 
sponded to the nation’s startling cry for help, and of¬ 
fered to give up their lives for their country, were the 
sons and brothers, the relatives and friends of those 
who, we are told, were glad when the awful carnage 
of war began. 

On April 20, 1SG1, was held the great mass meet¬ 
ing in Union Square, in New York City, at which more 
than 100,000 people were present. It is noted in liis- 
torv for the tremendous influence it had, not only in 
the city and state but throughout the entire North, in 
rousing and fixing the loyal determination that the re¬ 
bellion must be put down, cost what it might. It 
showed that the wealth and the power of the great 
city were unalterably committed to the cause of the 


8 


ERRORS OF POPULISM. 


union. Among those who took a prominent part in 
that meeting, and among those who formed the fam¬ 
ous Union Defense Committee that did so much to 
furnish men and money for the government, were 
many Wall street bankers and capitalists (9). 

In the face of these facts of history the Populist 
statements as to the lack of patriotism can not be 
true. Who wants to belong to a party whose leaders 
seek to build it up by making such statements? 

What are the facts about the offer of the “Shy- 
locks” to loan money to the government at .36 per cent, 
per annum? In December, I860, the secretary of 
the treasury was authorized to borrow $10,000,000 at 
the rate of interest offered by the lowest bidders. The 
loan was negotiated in January, 1861, and the latter 
part of December, 1860, and the entire amount was 
obtained at rates ranging from 8 to 12 per cent. 
Among the bids received by the government were a 
few insignificant ones, aggregating in amount only 
$465,000, at rates ranging from 15 to 36 per cent., 
which were not considered; and this is all the histor¬ 
ical basis there is for the statement, made all over the 
land by Populist loaders, that at that time capitalists 
refused to lend money to the government except at 
most exorbitant rates (4). 

And when was it that these exorbitant offers were 
made? It was when state after state was passing the 
ordinance of secession; when Floyd, the Democratic 
secretary of war, was transferring rifles and muskets 
and munitions of war from Northern arsenals to 
Southern arsenals; when the Democratic secretary of 
the navy was sending our vessels on long cruises to dis¬ 
tant seas so that the government might be powerless 
when the time came for the conspirators to strike; 


ERRORS OF POPULISM. 


9 


when the rebels were seizing the forts in the South and 
vast quantities of Federal stores; when Buchanan, the 
Democratic president, sat in his chair with folded 
hands, looking upon the ruin going on all around him 
and saying that he knew of no constitutional means of 
preventing it (5). It would seem to have been a very 
risky venture to offer such a government money 
even at 3G per cent, interest. 

Finally the traitorous and imbecile Democratic ad¬ 
ministration came to an end. The Republican party 
assumed control of the country. President Lincoln 
declared that secession would be resisted to the last 
extremity. At last the government was in safe hands 
and had the confidence of the loyal element of the na¬ 
tion. What then was the course of the bankers and 
capitalists when the government asked for money to 
put down the rebellion? 

At the suggestion of a New York banker, Mr. Coe, 
the representatives of the banks of New York, Phila¬ 
delphia and Boston had a conference with Secretary 
Chase as to the best means of supplying the govern¬ 
ment with monev. “Men's hearts failed them: the re- 

«- 7 

hellion was upon so large a scale, and had so unex¬ 
pectedly broken out, and raged with such fury, that to 
subdue it seemed to most persons to be impossible. 
After careful deliberation and consultation with the 
secretary of the United States treasury, the banks de- 
cided it to be wise for them to depart from their usual 
and legitimate business and sustain the government 
credit, and stand or fall with it" (6). The banks of the 
three cities combined and arranged to loan the gov¬ 
ernment $150,000,000 in three equal installments. 
The first installment was negotiated in August, 
the second in October and the third in November, 


10 


ERRORS OF POPULISM. 


1861, when the Union arms were meeting with the 
most disheartening reverses. 

All this vast sum was paid in coin, except a small 
part of the last installment, which was probably paid 
in demand notes, for which the government had been 
giving coin on presentation. At the time when the 
Populist leaders say the “Shylocks” were hoarding 
their coin, they were actually pouring it, in golden 
streams, into the United States treasury. 

For the first $100,000,000 advanced by the banks 
the government gave its notes, running three years, 
bearing 7 3-10 per cent, interest, fundable into 20-year 
0 per cent, bonds. And these notes were thus funded; 
so that, practically, the $100,000,000 was exchanged 
for bonds. For the last installment of $50,000,000 the 
government issued to the banks $50,000,000 in 20-year 
0 per cent, bonds at a rate equivalent to par for 7 per 
cent, bonds, thus making a considerable rebate. After 
the first installment was negotiated the government, 
with great effort, sold directly to the people about $25,- 
000,000 of the 7-30 notes and reimbursed the banks to 
that extent for money advanced. Hut the common 
people, whose willingness to aid the government is so 
highly lauded, were so reluctant to loan the govern¬ 
ment money at such low rates that the government 
made no further efforts to sell the notes and reimburse 
the banks, which were thus compelled to bear the 
whole burden. 

The undertaking was so great that the banks were 
drained of their coin, and were compelled, with the 
government, to suspend specie payments December 
30, 1861, when the banks found themselves loaded 
down with government securities that they could not 


ERRORS OF POPULISM. 


11 


sell to the people for cost. The specie in the New 
York banks had been decreased more than half. 

A high financial authority says: “The coin received 
from the Boston, New York and Philadelphia banks, 
in payment of their subscriptions to the government 
loans, to the amount of nearly $150,000,000, had to be 
sent to every point of the United States to meet public 
obligations, and, when thus scattered, was not readily 
returned to the banks, thus exhausting their resources 
and their ability to loan again” (7). 

Another authority says: “The preparations for 
war from March 4, 1861, and its subsequent prosecu¬ 
tion called for immense expenditures; and by Decem¬ 
ber, 1861, the secretary of the treasury borrowed from 
the banks and capitalists of New York, Philadelphia 
and Boston $144,000,000, which he had required them 
to pay in coin; and in the course of this month these 
banks found themselves under the necessity of sus- 
pending specie payments” (8). 

No attempt is made, or can successfully be made, 
to defend the men who, at a later period, gambled in 
gold and made themselves rich out of the necessities of 
the government and the people. They are to be con¬ 
demned just as those are to be condemned who gam¬ 
bled in wheat, in meat, in clothing, and other things 
that the government and the people had to have, and 
which could to any extent be cornered. But there is 
no doubt that had not the bankers and capitalists, led 
by Wall street, come so generously and patriotically 
to the support of the government in 1860 and 1861 the 
rebellion would have been a success; and for that ac¬ 
tion they are entitled to the highest praise instead of 
being denounced as scoundrels and robbers. It was 
on a par with the action of Robert Morris, the Pliila- 


12 


ERRORS OF POPULISM. 


delpliia banker, who so generously came to the assist¬ 
ance of the* government in tlie Revolutionary war, and 
whom an ungrateful people permitted to spend the last 

days of his life in jail, a prisoner for debt. 

1. Pages 12, 13, 14, 15: “The Silver Question,” by Robert 
Schilling, p. 4; “The Alarm—Coming Revolution,” p. 14. 2. “Im¬ 
perialism in America,” p. 74; “The Alarm—Coming Revolu¬ 
tion,” p. 34. 3. “Harper’s Pictorial History of the Great Rebel¬ 

lion,” vol. 1, p. 90; Bossing’s “History of New York City,” 
vol. 2, p. 726; “The American Conflict,” by Horace Greeley, 
vol. 1, p. 469; “Rebellion Records,” vol. 1, p. 80 of Documents. 
4. Lalor’s “Cyclopedia of Political Science,” etc., vol. 3, p. 972; 
“United States Notes,” by John Jay Knox, p. 76; Bolles’ “Finan¬ 
cial History of the United States,” vol. 3, p. 5. 5. “The Ameri¬ 
can Conflict,”vol. 1, p. 413; Sherman’s “Forty Years in the 
House, Senate and Cabinet,” vol. 1, p. 211. 6. Lalor, vol. 3, 

p. 977; Bolles, vol. 3, p. 35. 7. Sherman’s “Forty Years,” vol. 
1, p. 269. 8. “American Cyclopedia,” vol. 11, p. 743. 9. Loss¬ 

ing’s “History of New York City,” vol. 2, p. 720; “Rebellion 
Records,” vol. 1, pp. 83-109 of Documents. 


ERRORS OF POPULISM. 


'13 


CHAPTER II. 

THE DEMAND NOTES AND THE GREENBACKS.-WHY DID 

THE DEMAND NOTES NOT DEPRECIATE? 

The teaching of Populist leaders with reference to 
the demand notes and greenbacks is as follows: At 
the beginning of the war congress authorized the issue 
of paper money, called demand notes, a full legal ten¬ 
der for all debts, public and private. Because of this 
full legal tender quality, they were, through all the 
vicissitudes of the war, as good as gold. Afterward 
the greenbacks were issued, a full legal tender for 
everything except duties on imports and interest on 
the public debt. And because of this exception to 
their legal tender quality, denounced by all Populists 
in good and regular standing as infamous, they were 
not as good as gold, but depreciated greatly. 

Emery says: “Hollowing this declaration came the 
enactments of July 17, 1861, and February 12, 1862, 
authorizing the issue of $60,000,000 treasury notes, 
not bearing interest, and payable for all debts, public 
and private. * * * The issuance of this money at 

once brought relief to the country. * * * Com- 

merce, industry and education received a new impetus 
and flourished as never before in the history of the 
country” (1). 

Another Populist author says: “As a result a bill 
was passed to issue non-interest bearing treasury notes 
in small denominations, which were to be money for 

e/ 

all purposes, with no exception. Sixty million dollars 


14 


ERRORS OF POPULISM. 


of these notes were issued, known as demand notes” (2). 

John Davis, Populist congressman from Kansas, 
said: “In the North were two sorts of paper money. 
The first $60,000,000 were receivable in the revenues 
of the government the same as coin, and legal tender 
for all debts. Another class of paper money issued 
during the war, known as greenbacks, was not receiv¬ 
able for duties on imports nor for interest on the public 
debt. * * * It sometimes went below 50 cents on 

the dollar because of its legal disabilities, and from 
no other cause” (3). 

Solon C. Thayer, another Populist writer, makes the 
following statement: “The acts of July 17, 1861, and 
February 12, 1862, authorizing the issue of the full 
legal tender notes, were hailed with great joy by all 
business men, mechanics and laboring men” (12). 

Similar declarations by acknowledged People’s 
party representatives could be quoted indefinitely. 

It is now proposed to give the actual historical facts 
relating to the issuance of the demand notes and green¬ 
backs, and to point out some of the erroneous notions 
with which ignorant or dishonest leaders have imbued 
the rank and file of the party. 

By the act of July 17, 1861, supplemented by the 
act of August 5, 1861, (4) congress authorized the issue 
of $50,000,000 of treasury notes, payable on demand by 
the assistant treasurers of the United States at New 
York, Philadelphia, Boston, St. Louis, and by the Unit¬ 
ed States depositary at Cincinnati. They bore no in¬ 
terest, were not a legal tender for any purpose what¬ 
ever except that they were receivable in payment of 
public dues. They were first issued in August, 1861, 
in payment of salaries to public officers, and they were 
received by all classes of people with the greatest re- 


ERRORS OF POPULISM. 


15 


luctance. To aid their circulation, Gen. Scott issued a 
circular to the army, urging his men to accept them. 
The secretary of the treasury and other officers signed 
a paper agreeing to take them in payment of salaries. 
Secretary Chase sent a circular to the various assist¬ 
ant treasurers stating that the notes were being issued, 
“redeemable in coin on demand.” Since the notes were 
authorized prior to the suspension of specie payments, 
and were proclaimed as payable in coin by the circular 
of the secretary, they were considered so payable (5). 
Thaddeus Stevens, in a speech before congress, speak¬ 
ing of this first: issue of treasury notes, said: “When 
the first $50,000,000 were issued they were paid out 
expressly to be redeemed at the sub-treasuries when 
presented, and the public so understood it” (G). Sec¬ 
retary Chase, in his report of December 4, 1862, says, 
with reference to the coin redemption of these notes 
up to December 30,1861: “Up to that date, every note 
presented for payment had been promptly redeemed 
in coin” (7). 

Where did the government get the coin with which 
to redeem the notes? From the $150,000,000 coin loan 
of 1861, and from customs receipts. 

After December 30, 18G1, when only $33,460,000 of 
them were outstanding, the government retired them 
as rapidly as possible, since they were receivable for 
customs and embarrassed the government in provid¬ 
ing coin for interest on the public debt. However, 
for temporary purposes, on February 12, 1862, $10,- 
000,000 more demand notes, similar to the former ones, 
were authorized (8). It was a part of the act provid¬ 
ing for the issue of greenbacks, February 25, 1S62, that 
$50,000,000 of the greenbacks should be used in taking 
up and retiring demand notes previously issued. More 


ERRORS OF POPULISM. 


16 * 

than 156,000,000 of the demand notes had been retired 
by July 1, 1863, and the rest soon after. 

«y / J 

On March 17, 3 862, when the amount in circulation 
had been greatly reduced by receipt and cancellation, 
congress passed an act providing that the demand 
notes, in addition to being receivable for duties on im¬ 
ports, should be “lawful money and a legal tender, in 
like manner, and for the same purposes, and to the 
same extent,” as the greenbacks (0). Since the green¬ 
backs were not a legal tender for interest on the public 
debt, the demand notes also lacked that quality; in 
other words, the demand notes never were “a full legal 
tender for all debts, public and private,” as Populist 
leaders ignorantly assert. Statements that the acts 
authorizing them made them a full legal tender for all 
debts, public and private, are positively untrue. Up 
to March 17, 1862, they were a legal tender for noth¬ 
ing except government dues. At the best they had 
but little more of legal tender quality than the green¬ 
backs had. 

On December 30, 1861, Mr. Spaulding, a Buffalo 
banker, introduced into the house a bill authorizing 
the issue of greenbacks, a full legal tender for all debts. 
Great doubts were entertained as to the legal tender 
clause. On this account Thaddeus Stevens at first hes¬ 
itated to support it, but he soon changed his mfnd, 
and supported it as “a measure of necessity, not of 
choice.” The bill passed the house by a vote of 93 
to 59. 

The senate amended the bill, making tlfe notes a 
full legal tender for all debts except for duties and in¬ 
terest on the public debt. “It was felt that if no pro¬ 
vision was made for the payment of the interest on the 
bonds in coin, they would depreciate more and more, 


ERRORS OF POPULISM. 


17 


while such payment would tend, as it did, to maintain 
them nearer to the specie standard. In order to ob- 
tain coin for the payment of the interest, provision was 
made that all duties should be paid in coin. It was 
felt that the duty on imported goods should not be 
lessened by any depreciation of our local currency. 
Such importations were based on coin values, and the 
tax levied on them was properly required to be paid 
in coin. This security of coin payment enabled the 
government to sell the bonds at a far higher rate than 
they would have commanded without it, and tended 
also to limit the depreciation of the greenbacks.” 

The bill thus amended passed the senate by a vote 
of 30 to 7, and the house by a vote of 97 to 22. It was 
the first law ever passed making anything but gold and 
silver a general legal tender in the United States. It 
provided for the issue of $150,000,000 of greenbacks, 
fundable at par into 6 per cent. 5-20 bonds, interest 
payable semi-annually in coin. Under the acts of July 
11, 1862, and March 3, 1863, $300,000,000 more green¬ 
backs were issued, but the act of March 3, 1863, pro¬ 
vided that the right of the holder of greenbacks to 
exchange them at par for bonds should cease on July 


1, 1863. 

President Lincoln reluctlantly gave his approval 
to the act authorizing the third issue of greenbacks, 
saying: ‘‘The currency has already become so redund¬ 
ant as to increase prices beyond real values, thereby 
augmenting the cost of living to the injury of labor, 
and the cost of supplies to the injury of the whole 
country” (10). 

The demand notes were always about on a par with 
gold; the greenbacks depreciated and varied greatly. 
Just before the battle of Gettysburg greenbacks were 


E P — 2 


18 


ERRORS OF POPULISM. 


worth 40 cents on the dollar, and after the battle GO 
cents. On June 4, 1804, the day after Grant lost 10,000 
men in twenty minutes at Cold Harbor, they went down 
to 35 cents on the dollar, the lowest point they ever 
reached. For the four months just before the close of 
the war a dollar in gold was worth, on the average, 
$2.06 in greenbacks; for the four months just after the 
close of the war. $1.42. Since January 1, 1879, the 
greenbacks have been worth par with gold. 

Why were the demand notes always at par? Popu¬ 
lists say, “Because they were a full legal tender for all 
debts, public and private." But this can not be the rea¬ 
son, for, as has been shown, they never were a full 
legal tender for all debts, public and private. The gov¬ 
ernment maintained them at par by redeeming them 
in coin, either directly by giving coin for them on pre¬ 
sentation at the sub-treasuries, or indirectly bv receiv- 
ing a limited quantity of them, in place of gold, in pay¬ 
ment of duties. 

Why did the greenbacks depreciate in value and 
fluctuate? Chiefly because the government made no 
attempt, either directly or indirectly, to redeem them 
in coin, and because the credit of the government va¬ 
ried. They were indefinite as to time and place of pay¬ 
ment. To a great extent, their value rose and fell with 
the successes and failures of the Union arms. When 
Lee, with the finest armv that the South ever sent 
forth was marching through Pennsylvania, boasting, 
with some reason, that he would dictate terms of 
peace at Philadelphia, it seemed very doubtful 
whether Uncle Sam would ever be able to pay his notes 
or not; and they went down to 40 cents. After the 
battle his credit was better, and his notes rose in 
value. The successful close of the war greatly in- 


ERRORS OF POPULISM. 


19 


creased the confidence of the holders of the notes that 
they would soon be paid. 

If the exception clause prevented the greenbacks 
from being at par with gold, why has it not prevented 
them from being at par since January 1, 1879? The 
exception clause is still on the greenbacks. The bond¬ 
holder may still demand coin in payment of interest 
or principal if he wishes to do so; and it is regulation 
merely, not law, that permits greenbacks to be re¬ 
ceived at the custom houses. The reason why green¬ 
backs have been as good as gold since January 1, 1879, 
is because, since then, the holders have been able to 
get gold for them—the very reason that made the de¬ 
mand notes as good as gold. 

Again, only $60,000,000 of demand notes were is¬ 
sued, and they, were out but a short time, while the 
credit of the government was comparatively good. 
Up to June, 1862, the premium on gold was less than 
4 per cent. The greenbacks were issued to the 
amout of $450,000,000 and were all outstanding during 
the darkest hours of the war, when the credit of the 
government was the poorest and the public debt was 
increasing at the rate of several million dollars a day. 
Of course the credit of the government could be kept 
good for a small liability much more easily than for a 
large liability. 

Mere receivability for government dues can not 
maintain the value of government notes if a greater 
amount of notes are issued than can be used for that 
purpose. For, if any notes thus issued can not be used 
for the purpose that gives them value, their value must 
be lessened, just as the rent of houses in a city must fall 
if a much greater number of houses are built than can 
be used. It is right on this point that Populists make 


20 


ERRORS OF POPULISM. 


And if tlie credit of the government receiving the 
notes for public dues is poor, that fact greatly detracts 
from the value of the notes. During the war of 1812 
treasury notes of this character, bearing 5 2-5 per cent, 
interest, were issued to the amount of $17,000,000. In 
1814 these notes were in such ill-repute that no one 
willingly accepted them, and they were away below 
par with coin. But after the war came to a success¬ 
ful close and the credit of the government again be¬ 
came good, the notes sold at par (11). 

As it is with men, so it is with governments. It is 
their ability, real or supposed, to keep their promises, 
that makes their promises good. Let it be again re¬ 
peated, the demand notes were as good as gold be¬ 
cause the holders could get gold for them. The green- 
backers were not as good as gold because the holders 

could not get gold for them. 

1. “Seven Financial Conspiracies,” p. 16. 2. “The Alarm— 
Coming Revolution,” p. 14. 3. Congressional Record, August 

21, 1893, p. 579. 4. Congressional Globe, 1861, 1st session 37th 
congress, appendix, pp. 24, 40. 5. Lalor’s “Cyclopedia of Polit¬ 
ical Science,” etc., vol. 3, p. 976; “United States Notes,” p. 90; 
Bolles, vol, 3, p. 15. 6. Congressional Globe, February 12, 

1862, p. 779. 7. Congressional Globe, 1862-63, part 2, appendix, 
p. 23. 8. Congressional Globe, 1861-62, part 4, appendix, p. 336. 
9. Congressional Globe, 1861-62, part 4, appendix, p. 345. 10. 

Perry’s “Political Economy,” p. 405. 11. American Cyclopedia, 
vol. 11, p. 742. 12. “A. B. C. of Political Economy,” p. 8. 


ERRORS OF POPULISM. 


21 


CHAPTER III. 

THE NATIONAL BANK ACT.-DID SCOUNDRELS PASS IT?- 

THAD STEVENS, CHASE, SUMNER, LINCOLN. 

It is the proud boast of Republicans that during the 
war period the Republican party did the grandest work 
that any political party ever performed, and that its 
leaders were among the most wise, honest and patriotic 
that ever conducted the affairs of a nation. Demo¬ 
crats admit the claim; but they say that since that 
time the party and its leaders have deteriorated and 
become greatly inferior to the capable Democratic 
party, largely made up of broad-minded statesmen, 
who have under the leadership of President Cleveland 
so successfully managed the affairs of the country. 
Populists deny this claim, so justly made by Repub¬ 
licans, and so freely admitted by Democrats, and as¬ 
sert that the Republican party is totally unworthy of 
support because its leaders have always been com¬ 
pletely under the control of the money power, and es¬ 
pecially during the war period enacted laws for the 
purpose of robbing the people. One Populist writer 
says: “The record of the American congress from 
February 25,1862, to the present time is a record of the 
blackest and most heartless crimes” (1). 

Among these crimes is the establishment of the na¬ 
tional banking system. 

Emery, the most noted of all Populist writers, says: 
“Of all the villanous schemes of robbery ever prac¬ 
ticed upon any people, our national banking system 


22 


ERRORS OF POPULISM. 


stands pre-eminent,” and maintains that it was “delib¬ 
erately planned for the purpose of robbing the people.” 
Contrasting the brave soldier, dying on the battlefield, 
and the grief-stricken homes all over the land, with the 
Republican congress passing the national bank act, 
Emery says: “In our nation's capital are assembled 
the lawmakers of the land; among them are those who 
encouraged and urged on the war. * * * These are 
they who sat in our congressional halls, and speculated 
upon the most effectual means of robbing the widows 
and orphans of these dead and dying soldiers, who in¬ 
stituted laws by which the children and children's 
children of these helpless soldiers should henceforth 
become their wage slaves, and the bondmen of their 
children through all generations” (2). 

The author does not contend that the present baniv- 
ing system is the best that could be devised, or that 
it should be continued indefinitely. But he does most 
strongly maintain that it is vastly superior to the old 
system of “wild cat" state banks, and that it was estab¬ 
lished through the efforts of as honest, able and patri¬ 
otic men as ever lived—not by scoundrels, for the pur¬ 
pose of extortion and robbery. 

In 18G1 there were 1601 state banks, 10,000 different 
kinds of notes, in thirty-four states, under forty dif¬ 
ferent statutes (3). “It is not necessary to dwell upon 
the defects of the state bank system, or the character 
of a considerable part of the notes which the people 
were compelled to receive and treat as money. There 
were scarcely two states in the Enion whose svstems 
were alike. In some states banks were chartered with 
proper restrictions upon their discounts and their cir¬ 
culation; in others without any such restrictions. In 
some there was individual libaility; in others no 


ERRORS OF POPULISM. 


23 


liability at all, not even in cases of gross mismanage¬ 
ment. In some states the circulation of the banks was 
secured, partially, at least, by mortgages and bonds; 
in others there was no security except the capital, 
which was frequently a myth. In some states banking 
was a monopoly; in others it enjoyed the largest lib¬ 
erty. The consequence was that we had a bank note 
circulation frequently worthless, and, when solvent, 
lacking that uniform value which was needed in busi¬ 
ness transactions between the citizens of the differ¬ 
ent states. It is enough to say that the circulation of 
the state banks was entirely unfitted for a eountrv like 
ours; that by it the people were subjected to enormous 
losses, not only in the way of exchanges, but in the 
inability of a great many of the banks to redeem their 
notes.” 

Mr. Thompson, editor of the “Bank Note Detector,” 
estimated that the loss of state bank bill holders dur¬ 
ing the period 1850-60 was $75,000,000. And the de¬ 
positors lost much more heavily than that. During 
the last thirty-three vears how much have national 
bank bill holders lost? Not a dollar. How much on 
the dollar have depositors lost? About 8 cents (15). 
Through all these years the bills of one bank have been 
as good as the bills of any other bank; and since 1870 
all of them have been as good as gold. All the benefits 
to the country hoped for by those who worked to estab¬ 
lish the national banking system have been fully 
realized. 

What was the character of the men who secured the 
enactment of the national banking law? What are the 
facts with reference to this matter? 

From the very first Salmon Ik Chase, who became 
secretary of the treasury in March, 1861, favored the 


24 


ERRORS OF POPULISM. 


establishment of the system (4); and to him belongs the 
credit or discredit of bringing it before the people and 
urging its adoption. In his first annual report, Decem¬ 
ber 1), 1861, he presented two plans for sustaining the 
credit of the government and securing means to prose¬ 
cute the war: First, he suggested that the government 
issue its own notes direct to the people, “payable in 
coin on demand in amounts sufficient for the useful 
ends of a representative currency;” and second, the 
adoption of the national banking system. The first 
plan had been partly adopted at the last session of con¬ 
gress by the issuance of $50,000,000 of demand notes. 
Chase opposed the first plan, saying: “The temptation, 
especially great in times of pressure and danger, to 
issue notes without adequate provision for redemption; 
the ever-present liability to be called on for redemption 
beyond means however carefully provided and man¬ 
aged; the hazard of panics, precipitating demands for 
coin, concentrated in a few points and in a single fund; 
the risk of a depreciated and depreciating and finally 
worthless paper money; the immeasurable evils of dis¬ 
honored public faith and national bankruptcy—all 
these are possible consequences of the adoption of a 
system of government circulation.” 

On the other hand, Chase most strenuously recom- 
mended the national banking system, saying in its 
favor: “In this plan the people in their ordinary busi¬ 
ness would find the advantage of uniformity in cur¬ 
rency; of uniformity in security; of effectual safeguard, 
if effectual safeguard is possible, against deprecia¬ 
tion; and of protection from losses in discounts and ex¬ 
changes; while, in the operation of the government, the 
people would find the further advantage of a large de¬ 
mand for government securities, of increased facilities 


ERRORS OF POPULISM. 


25 


* 


for obtaining the loans required by the war. * * 

The secretary entertains the opinion that if a credit 
circulation of any form be desirable it is most desirable 

•s 

in this. The notes thus issued and secured, in his 
judgment, form the safest currency which this country 
has ever enjoyed” (5). 

The bankers of New York, hearing that Chase would 
recommend the national banking system in his annual 
report in December, 18G1, appointed James Gallatin, a 
prominent banker, to express to Chase their opposition 
to it, and their reasons therefor. The New York banks 
feared that the new law would depreciate the value of 
the state bonds then held by them to secure their circu¬ 
lation. Opinion was somewhat divided, but as a class 
the bankers of the country were opposed to the law; 
and most of the opposition to it in congress was made 
in their behalf. It is a common Populist statement 
that a number of “bank delegates” in Feb¬ 
ruary, 1SG2, coerced Secretary Chase into recom- 
mending the national banking system (6). Those 
who make the statement must be ignorant of the fact 
that Chase, more than a month before, in spite of the 
expressed disapproval of the New York banks, had in 
his annual report already strongly urged the adoption 
of the system. They could hardly have coerced him 
into doing something he had most willingly done sev¬ 
eral weeks before. Even Weaver tells the truth on 
this point, when he says, speaking of the proposed 
banking law: “State bank managers were at first hos¬ 
tile to the scheme” (7). 

In his second annual report, of December 4, 18G2, 
Chase again set forth the advantages of the proposed 
system. He emphasized the point that since Lnited 
States bonds would be required as a basis, “a steady 


26 


ERRORS OF POPULISM. 


market for the bonds would thus be established and 
the negotiation of them greatly facilitated*' (8). 

President Lincoln used all his influence in favor 
of the new system. Every member of his cabinet was 
in favor of it. 

In his annual message to congress of December 1 7 
1862, after declaring the desirability of a speedy re¬ 
turn to specie payments, and discussing the plans to 
secure a safe and uniform currency. President Lincoln 
said: “I know of none which promises so certain re¬ 
sults and is at the same time so unobjectionable as 
the organization of banking associations under a gen¬ 
eral act of congress well guarded in its provisions. To 
such associations the government might furnish circu¬ 
lating notes on the security of United States bonds de- 
posited in the treasury. These notes, prepared under 
the supervision of proper officers, being uniform in 
appearance and security and convertible always into 
coin, would at once protect labor against the evils of a 
vicious currency and facilitate commerce by cheap and 
safe exchanges 1 ’ (9). 

On tho passage of the bank act by congress United 
States 6 per cent, bonds advanced from 7 per cent, dis¬ 
count to a premium (10); and Secretary Chase, in liis 
report of December 10, 1863, says that the passage of 
the act was “followed by an immediate revival of pub¬ 
lic credit” (11). 

In his annual message of December 8, 1863, Lincoln 
thus commends the law which had been in operation 
ten months, and under which 134 banks had been or¬ 
ganized: “The enactment by congress of a national 
banking law has proved a valuable support of the pub¬ 
lic credit; and the general legislation in relation to 
loans has fully answered the expectation of its favor- 


ERRORS OF POPULISM. 


27 


ers. Some amendments may be required to perfect ex¬ 
isting laws, but no change in their principles or gen¬ 
eral scope is believed to be needed” (12). 

Again, in his last annual message, of December 6, 
1864, about four months before his death, Lincoln ex¬ 
pressed his warm approval of the system, saying: 
“The national banking system is proving to be accepta¬ 
ble to capitalists and to the people. * * * That the 
government and the people will derive great benefit 
from this change in the banking systems of the 
country can hardly be questioned. The national 
system will create a reliable and permanent in¬ 
fluence in support of the national credit and protect 
the people against losses in the use of paper money” 
(13). 

Among those who voted in congress for the national 
banking act was Thaddeus Stevens, whose devotion to 
the welfare of the people is rarely questioned by intel¬ 
ligent men (14). Owen Lovejoy, whose brother fell a 
martyr to the cause of human freedom at Alton, Ill., 
voted for it. Spaulding, the father of the full legal 
tender greenback voted for it. Ben Wade, one of the 
most stalwart champions of justice that the nation 
ever had, voted for it. 

Charles Sumner voted for it. 

Henry Wilson, who by incorruptible honesty and 
devotion to the cause of right, rose from the ranks of 
poverty to the vice president’s chair, voted for it, say¬ 
ing: “I vote for this bill as a measure to sustain the 
credit of the government now. to aid to carry us 
through this crisis; and I vote for it also as a measure 
that is to give this nation what it has so long de¬ 
manded—a sound national currency.” 

Stevens, Wilson, Lovejoy, Wade, Sumner—these 


28 


ERRORS OF POPULISM. 


were some of the men who, according to Populist state¬ 
ment, sat in our congressional halls and speculated 
upon the most effectual means of robbing the widows 
and orphans of those who, on Southern fields, had 
given up their lives that the nation might live. 

Chase, Stanton, Seward—these were some of the 
chief promoters of the infamous crime. 

Lincoln, grand, noble, patient, martyred Lincoln, 
used all the influence of his position to consummate 
the villainy. 

If the charges of Populist leaders are true, then 
those who have been named, and many others just as 
worthv, were the worst scoundrels that ever walked 
the earth. Can it be that intelligent men will follow 
leaders whose teachings lead to such conclusions? 
Can it be that slanders upon the grandest men that 
the country has produced can be effectuallv used to 
build up a political party? Can any man who, as a 
Republican gloried in the achievements of the party 
during the war period, and who looked with honor and 
reverence upon the leaders of the party, now train 
politically with those who heap abuse upon the party 
and its leaders at llie very time when they were doing 
their noblest work? Do the leaders of the Populist 
party compare favorably, either in honesty, brains or 
patriotism, with the leaders of the Republican party 
during the war period? 

In view of the indisputable facts of history, the 
blatherings of ignoramuses and loud-mouthed dema¬ 
gogues that the national banking law was passed by 
scoundrels, or by ignorant dupes of the money pow T er, 
for the purpose of extortion and robbery, are w r orse 
than idle. Those who will defame such men as Lin¬ 
coln and the members of his cabinet and the splendid 


ERRORS OF POPULISM. 


29 


men who worked and voted for the national banking 
law are not fit to be trusted to any extent, however 
slight, with the administration of the affairs of this 
great country. 

1. “The Alarm—Coming Revolution,” p. 34. 2. “Seven 

Financial Conspiracies,” pp. 25, 30, 31. 3. Lalor’s “Cyclopedia,” 
vol. 1, p. 216. 4. Bolles’ “Financial History,” vol. 3, pp. 97, 87. 
5. Cong. Globe, 1861-62, part 4, appendix, p. 26. 6. “Seven Fi¬ 
nancial Conspiracies,” pp. 82, 17; Senator Peffer, Cong. Record, 
Sept. 30, 1893, p. 1980. 7. “Call to Action,” p. 398. 8. Cong. 

Globe, 1862-63, part 2, appendix, p. 25. 9. Same, p. 2. 10. Lalor, 
vol. 1, p. 217. 11. Cong. Globe, 1863-64, part 4, appendix, p. 4. 

12. Same, p. 2. 13. Cong. Globe, 1864-65, part 2, appendix, p. 

2. 14. Cong. Globe, 1862-63, part 1, p. 897; part 2, p. 1148. 15. 
Cong. Record, 53rd congress, 1st session, part 3, appendix, p. 28. 


30 


ERRORS OF POPULISM. 


CHAPTER IV. 

THE CIRCULATION IN 1865-66. -GREAT IMAGINATION OF 

POPULISTS.-A MISTAKE OF $ 1 , 000 , 000 , 000 . 

Populists assert that the amount of money in circula¬ 
tion in this country at the close of the war was vastly 
greater than at the present time, and that the Repub¬ 
lican party, in the interest of the money power, has 
since that time continually contracted the volume of 
money to the great distress and impoverishment of the 
people generally. 

In order that this charge may be met, it is first nec¬ 
essary to ascertain how much money was in circulation 

•j «- 

just after the war. Owing to its isolated position, the 
Pacific Coast maintained a coin circulation during 
the suspension of specie payments of about $25,000,000, 
and this amount should be added to the paper circula¬ 
tion to get the total money circulation of the country. 

During recent years, in the government reports, the 
expression, money in circulation, means money in the 
country outside of the United States treasury; but in 
this chapter it will be used as it is by Populists—when 
referring to 1865-6—as meaning the total amount of 
money in the country. 

#y «- 

James B. Weaver, Populist candidate for president 
in 1892, says that on August 31, 1865, the money in cir¬ 
culation amounted to about $2,000,000,000 (1). 

Ignatius Donnelly, the noted Minnesota Populist, 
says that in 1865 the amount of money in circulation 
was $2,113,606,802.51 (2). 


ERRORS OF POPULISM. 


31 


Emery status that the amount of money in circula¬ 
tion at the close of the war was about 12,000,000,000 
(3), and says: “Secretary McCulloch in his report for 
December, 18G5, says: “We have now about $2,000,- 
000,000, nearly all in circulation among the peo¬ 
ple’ ” (4). 

Senator Peffer, of Kansas, says that on July 1, 1865, 
“the amount of paper money in circulation in the Unit¬ 
ed States was $2,122,437,841.02” (5). 

At the period named there was outstanding a vast 
amount of temporary obligations of the government 
in the form of notes, then due or to become due before 


three years, bearing various rates of interest. Some 
of them were a legal tender for face exclusive of in¬ 
terest; but the greater part of them were not a legal 
tender at all. Populists include all these temporary 
debts of the government as a part of the money circula¬ 
tion. 

It is the purpose of this chapter to prove by the best 
evidence in the world that Populists are tremendously 
in error in this matter; that only a small part of the 
temporary interest-bearing obligations of the govern¬ 
ment entered into circulation as monev, and they only 
for a short time, and that the amount of money in cir- 
dilation in 1865-6 was considerably less than half the 
amount claimed by Populist leaders. 

It will be readily admitted that the best evidence 
as to this matter is the testimony of the officers of the 
government at that time, as shown by their official re¬ 
ports, and especially the statements of treasury offi¬ 
cials, because their duties placed them in a position 
to know more about it than anvbody else. And the 
statements of leading members of congress,made at the 
time, are entitled to much weight. It is upon such 


\ 


ERRORS OF POPULISM. 


‘10 
O £ 

proof mainly that tlie writer depends to establish what 
he has set out to prove. 

Hugh McCulloch, comptroller of the currency from 
1863 to March, 1865, and secretary of the treasury 
from 1865 to 1869, in his report of December, 1865, says: 
The paper circulation of the United States on the 31st of 


October last was substantially as follows: 

1. United States notes and fractional currency. .$454,218,038 20 

2. Notes of national banks. 185,000,000 00 

3. Notes of state banks, including outstanding 

issues of state banks converted into national 

banks. 65,000,000 00 

xotal .$704,218,038 £0 


“The amount of notes furnished to the national banks up 
to and including the 31st of October was a little over $205,- 
000,000, but it is estimated that $20,000,000 of these had not 
been put into circulation. 

“In addition to the United States notes, there were also 
outstanding $62,536,900 5 per cent, treasury notes and $173,012,- 
140 compound interest notes, of which it would doubtless be 
safe to estimate that $30,000,000 were in circulation as cur¬ 
rency. 

“From this statement it appears that, without including seven 
and three-tenths notes, many of the small denominations of 
which were in circulation as money, and all of which tend in 
some measure to swell the inflation, the paper money of the 
country amounted on the 31st of October to the sum of $734,- 
218,038.20.” 

And lie states in another part of the report that 
“the circulation, bank and national, had reached the 
startling amount of upward of $700,000,000” (6). 

It will be noticed that McCulloch reported only a 
small part of the 5 per cent, and compound interest 
notes as being in circulation as money. These notes, 
however, were more apt to be used as money than any 
of the other temporary interest-bearing notes of the 
government, because they were a legal tender for face 






ERRORS OF POPULISM. 


S3 


exclusive of interest, while the others were not a legal 
tender to any extent. Especially were they more apt 
to be used as money than the notes bearing 7 3-10 per 
cent, interest, and hence called 7-30s, for besides being 
a legal tender, which the 7-30s were not, they were is¬ 
sued in much smaller denominations than the 7-30s. 
Therefore if only 13 per cent, of the outstanding 5 per 
cent, and compound interest notes were used as money, 
a much smaller proportion of the 7-30s were used as 
money. At any rate, the amount of them in circula¬ 
tion was so small that McCulloch did not think it 
worth while to include them in his table as a substan¬ 
tial part of the circulation. 

Salmon P. Chase, secretary of the treasury from 
1SG1 to June 30, 1SG4, and chief justice of the supreme 
court of the United States from 1864 to 1873, speaking 
of the 5 per cent, and compound interest notes, said: 
“These notes never entered largely or permanently into 
the circulation” (7). With the exception of eight 
months Chase and McCulloch were at the head of the 
treasury department from 18G1 to 18G9. They issued 
and sold the greater part of all these notes. It was a 
part of their official business to know to what extent 
the notes entered into the circulation. The one in his 


official report in 18G5, the other in an opinion delivered 
from the supreme bench in 1870, declared that only a 
small part of the 5 per cent, and compound interest 
notes were used as money. Against the statements 
of these two men, of what avail in the minds of reason- 
ale men is the statement of Weaver and Peffer, made 


a generation later, that all the 5 per cent, and com¬ 
pound interest notes were used as money ! 

Emery and Smith both pretend to quote the exact 
words of McCulloch, in his report of December, 1805, 


K P — 3 


34 


ERRORS OF POPULISM. 


saying that about $2,000,000,000 was in circulation. 
The alleged quotation is a forgery. Nothing like it is 
to be found in the report. When Populist leaders have 
to resort to the forgery of government reports to sub¬ 
stantiate their claims they acknowledge their great 
weakness. 

Freeman Clarke, comptroller of the currency in 
1865, in his report for that year, agrees substantially 
with the estimate of the secretary of the treasury as 
to the amount of money in circulation in October, 
1865. He makes a minute and detailed statement of 
the various kinds of notes entering into the circula¬ 
tion, but he mentions no part of the 7-30s, however 
small, as being used as money. And he states that 
the greater part of the compound interest notes were 
held by insurance companies and other financial insti¬ 
tutions as an investment (8). 

President Johnson, in his annual message of De¬ 
cember 4,1865, says: “Five years ago the bank note cir¬ 
culation of the country amounted to not more than 
$200,000,000; now the circulation, bank and national, 
exceeds $700,000,000. The simple statement of the 
fact recommends more strongly than anv word of mine 
could do the necessity of our restraining this expan¬ 
sion” (9). 

F. E. Spinner, treasurer of the United States from 
1861 to 1875, in his report of November 1, 1870, not un¬ 
dertaking to give the bank note circulation, gives the 
“total amount of United States currency outstanding” 
on June 30, 1865, as follows: 


Demand notes.$ 472,603 50 

Legal tender notes. 431,066,427 99 

Compound interest notes . 191,721,470 00 

Five per cent, notes. 50,625,170 00 

Fractional currency . 25,033,128 76 


Total ..$698,918,800 25 










ERRORS OF POPULISM. 


35 

For June 30, 1866, lie gives the total amount as 

$608,8*0,825.46, made up of the same kinds of notes 

(10); but he makes no estimate as to what part of the 

5 per cent, and compound interest notes were in use 

as monev. 

*/ 

In his report of August 31, 1867, Spinner gives the 
following “recapitulation of outstanding United States 
notes and currency now in use for circulation'’ (11): 

United States notes .$371,745,916 50 

Fractional currency . 38,454,841 65 

Total . $400,200,758 15 

And he says: “The following tables exhibit, under 
their appropriate heads, the whole amount of paper 
money that has been issued bv the government of the 
United States from the commencement of such issues 
under the act of July 17, 1861, to June 30, 1867,” and 
then he names, in the table, demand notes. United 
States legal tender notes, fractional currency, com¬ 
pound interest notes, and 5 per cent, notes, and these 
only. The only temporary interest-bearing obliga¬ 
tions of the government that he counts as having been 
used as money were the 5 per cent, and compound in¬ 
terest notes. The use of the others, the 7-30 notes, for 
instance, as money was so slight that he excludes them 
from the tables entirely. 

The official statements of the government officers 
that have been presented are, by themselves, amply 
sufficient to settle the whole dispute as to the amount 
of money in circulation in 1865-6. 

In the spring of 1866, when the bill for the contrac¬ 
tion of the currency was before congress, various esti¬ 
mates were made in the discussion as to the amount 
of money in circulation. There was a difference of 






36 


ERRORS OF POPULISM. 


opinion as to the extent to which the temporary inter¬ 
est-bearing* debts of the government circulated as 
money, and hence the different estimates. But surely 
the congressmen of 1866 had a more accurate knowl¬ 
edge regarding the amount of money then in circula¬ 
tion than have the congressmen or other public men 
of todav. Next to the statements of treasury officials, 
the estimates of those congressmen are the best that 
can be obtained. Following is a list of members of 
congress participating in the debates, with the amount 
of monev which each one estimated was in circula¬ 


tion set opposite his name (12): 

Pike. 

Spalding. 

Morrill. 

Broomall. 

Griswold. 

Sherman. 

Lynch . 


$768,000,000 

750,000,000 

944,000,000 

900,000,000 

750,000,000 

704,000,000 

725,000,000 


From all the foregoing it would seem to be conclu¬ 
sively established that when Populist leaders assert 
that in 1865-66 there was $2,000,000,000 in circulation 
they draw on their imagination for more than $1,000,- 
000,000. 

1. “Call to Action,” pp. 310, 307. 2. “The American Peo¬ 

ple’s Money,” pp. 40, 90. 3. “Seven Financial Conspiracies,” p. 
64. 4. “Imperialism in America,” p. 21; “The Condition of 

Our Country,” by Carey Smith, p. 20. 5. Cong. Record, 53rd 

congress, 1st session, part 3, appendix, p. 41. 6. Cong. Globe, 

1865-66, part 5, appendix, p. 36. 7. See Hepburn vs. Griswold, 
8 Wall., 603; 19 U. S. Supreme Court Reports, 525. 8. Cong. 

Globe, 1865-66, part 2, p. 1454. 9. Cong. Globe, 1865-66, part 5, 
appendix, p. 4. 10. “Finance Report,” 1870, pp. 202, 203. 11. 

“Finance Report,’ 1867, pp. 132, 135. 12 Cong. Globe, 1865-66, 
part 2, pp. 1454, 1465, 1466, 1496, 1612, 1850. 










ERRORS OF POPULISM. 


37 


CHAPTER V. 

THE 7-30 NOTES WERE NOT A LEGAL TENDER-NOT 

ISSUED AS MONEY-NOT A PART OF BANK RESERVES. 

Iii 1864 and 1865 tlie government issued $830,000,- 
000 of treasury notes, running three years, bearing in¬ 
terest at the rate of 7 3-10 per cent, per annum paya¬ 
ble semi-annually. In all essential points they were 
exactly similar to the ordinary promissory notes of a 
private individual. Six hundred million dollars of 
these notes were authorized by the act of March 3, 
1865, the remainder bv the act of June 30, 1864. They 
were fundable into 6 per cent. 5-20 bonds, and this fact 
was printed upon the back of each note in the following 
words: “At maturity convertible at the option of the 
holder into bonds-” (1). 

They were issued in three series, dated August 15, 
1864; June 15, 1865, and July 15, 1865. In round num¬ 
bers they were issued in the following denominations: 


$ 50,000,000 in. 5,000s 

370,000,000 in. 1,000s 

228,000,000 in. 500s 

137,000,000 in. 100s 

44,000,000 in. 50s 


Populist leaders have most zealously promulgated 
false notions in regard to the 7-30s, as to their circula¬ 
tion as money, the manner of their issuance, and the 
real character of the notes. 

Emerv states that they “were made lawful money 
and a legal tender by the acts creating them” (0). 








38 


ERRORS OF POPULISM. 


Weaver says they were “made legal tender at their 
face value, exclusive of interest/ 7 and that when not 
paid to the soldiers they were paid out “in current 
government business” (2). 

Heath says the}^ were issued “to be paid out as 
money to soldiers and other creditors of the govern¬ 
ment” (3). 

Peffer and Davis, of Kansas, both claim that the 
7-30s issued under the act of June 30, 1S64, were a legal 
tender (4). 

Were the 7-30 notes a legal tender? 

The onlv laws of the United States in force while 

t j 

the 7-30s were outstanding, relating to their legal ten¬ 
der quality, are to be found in the two acts of congress 
authorizing them. Section 3 of the act of March 3, 
1865, conclusively settles it that the notes issued under 
that act were not a legal tender, for it provides in so 
many words, “That nothing herein contained shall be 
construed as authorizing the issue of legal tender notes 
in any form” (5). 

Section 2 of the act of June 30,1S64, provides, “And 
the said treasury notes may be disposed of by the sec¬ 
retary of the treasury, on the best terms that can be 
obtained, for lawful money; and such of them as shall 
be made payable, principal and interest, at maturity, 
shall be a legal tender to the same extent as United 
States notes for their face value, excluding inter¬ 
est” (6). Populist leaders quote this provision as posi¬ 
tive proof that the notes issued under this act were a 
legal tender. They do not seem to think it worth 
while to find out whether or not the notes as issued 
were made payable, principal and interest, at matu¬ 
rity. As a matter of fact, the secretary of the treas- 
urv exercised the discretion vested in him by the law 



ERRORS OF POPULISM. 


39 


as to when the interest should be paid, and issued the 
notes with the interest payable semi-annually, not at 
maturity; hence they did not come within the provis¬ 
ion that made them a legal tender. 

William Pitt Fessenden was the secretary of the 
treasury who issued the 7-30 notes under this act. His 
annual report of December 6, 1864, is conclusive as to 
the time when the interest was payable, and the char¬ 
acter of the notes as to legal tender. After speaking 
of the difficulty which the secretary had had in rais- 
ing funds to pay the expenses of the government, he 
says: 

“He had then no other alternative than to issue legal tender 
notes to a very large amount or again advertise for a loan, and 
he had no hesitation as to which course should be adopted. Ac¬ 
cordingly, on the 25th of July, he issued proposals for a na¬ 
tional loan, under the act of June 30,1864, upon notes payable in 
three years, with semi-annual interest at 7.3 per cent, per an¬ 
num in lawful money. He incurred a considerable expense in 
advertising this loan, believing that it should be as widely dif¬ 
fused and as generally understood as possible, and offered lib¬ 
eral inducements to stimulate the efforts of corporations and 
individuals to dispose of the notes. * * * 

“A serious obstacle to greater success has been, the sec¬ 
retary believes, the amount of other desirable national securi¬ 
ties pressing upon the market, and presenting more favorable 
opportunities for investments. * * * More fully to ac¬ 

complish his purpose, the secretary resolved to avail himself 
of a wish expressed by many officers and soldiers, through the 
paymasters, and offered to such as desired to receive them 
seven-thirty notes of small denominations. He was gratified to 
find that these notes were readily taken in payment to a large 
amount, our gallant soldiers, in many instances, not only receiv¬ 
ing them with alacrity, but expressing their satisfaction at be¬ 
ing able to aid their country by loaning money to the govern¬ 
ment. The whole amount of notes thus disposed of exceeded 
$20,000,000, and the secretary has great satisfaction in stating 
his belief that the disposal thus made was not only a relief to 


4 


40 ERRORS OF POPULISM. 

the treasury, but proved a benefit to the recipients, in affording 
them a safe and valuable investment and an easy mode of 
transmitting funds to their families” (7.) 

Under the general provisions of the act of June 
30, 1804, though not specifically authorized, a large 
amount of 0 per cent, compound interest notes were 
issued, payable principal and interest at maturity, 
and therefore, according to the provisions of the act, 
a legal tender for face, exclusive of interest. Some 
have confused these notes with the 7-30s authorized 
by the same act (8). 

Were the 7-30s issued as money? Were they act- 
ually paid out ‘‘in current government business?” 

Most emphatically, no. And those who state that 
it was in this way that the government disposed of 
them are either woefully ignorant of the historical 
facts, or else utterly regardless of the truth. Almost, 
if not entirely, without exception, the 7-30s were not 
paid out as money, but were sold by the government 
to investors just as the bonds were sold. The official 
reports of the two secretaries of the treasury who 
sold them place the matter beyond dispute. So far 
as known to the author, the only alleged instance of 
the 7-30s being paid out as money was when the sol¬ 
diers took $20,000,000 of them in payment of their 
services. But creditors often accept groceries, or 
checks on banks, as payment, but this does not make 
the groceries or checks money. The entire account 
of this transaction, as found in Fessenden’s report— 
not the garbled and distorted account that Donnelly 
mendaciously says is found in Fessenden’s report (9) 
—shows that neither the secretary nor the soldiers 
considered the 7-30s as money. The notes were offered 
“to such as chose to receive them.” If the notes had 


ERRORS OF POPULISM. 


41 


been legal tender money the soldiers would have been 
compelled to take them in payment whether they chose 
to 1 ecehe them or not; they would have had no choice 
in the matter. The soldiers thought that they were 
“loaning money to the government/’ and the secretary 
thought the soldiers had made a “safe and valuable 
investment.” The only difference between the sol¬ 
diers and those who bought the notes from the paid 
agents of the government was that the former ex¬ 
changed services for the notes, while the latter ex¬ 
changed money. 

That Fessenden did not consider the 7-30s as 
money, and that they were not paid out by the gov¬ 
ernment as money, is further shown by Fessenden’s 
circular, dated December 3, 1804, to bank officers 
throughout the country, in which he advertises the 
7-30s for sale. The opening paragraph is as follows: 
“Desiring to avoid any further issue of bonds, the in¬ 
terest of which is payable in coin, or any further in¬ 
crease of paper circulation, I ask your special atten¬ 
tion to the 7-30 notes now offered to the public” (10). 
And vet we are told that the 7-30s were a legal ten¬ 
der, and paid out in “current government business.” 

Secretary McCulloch, who issued the greater part 
of the 7-30s, in his report of December 4, 1865, tells 
how he disposed of them. After speaking of the 
heavy requisitions from the war department after the 

capture of Richmond, he says: 

“As it was important that these requisitions should be 
promptly met, and especially important that not a soldier should 
remain in the service a single day for want of means to pay 
him, the secretary perceived the necessity of realizing as speed¬ 
ily as possible' the amount—$530,000,000—still authorized to 
be borrowed under this act. 

“The seven and three-tenths notes had proved to be a 


42 


ERRORS OF POPULISM. 


popular loan, and although an security on longer time and lower 
interest would have been more advantageous to the govern¬ 
ment, the secretary considered it advisable, under the circum¬ 
stances, to continue to offer these notes to the public, and to 
avail himself, as his immediate predecessors had done, of the 
services of Jay Cooke, esq., in the sale of them. The result was 
in the highest degree satisfactory. By the admirable skill and 
energy of the agent, and the hearty co-operation of the national 
banks, these notes were distributed in every part of the North¬ 
ern and in some parts of the Southern states, and placed within 
the reach of every person desiring to invest in them. No loan 
offered in the United States, notwithstanding the large amount 
of government securities previously taken by the people, was 
so promptly subscribed for as this. Before the first of August 
the entire amount of $530,000,000 had been taken” (11). 

Charles Foster, secretary of the treasury under 
President Harrison, speaks thus of the 7-30s: “A 
note which is issued as money is simply paid out in 
settlement of demands upon the government. The 
seven-thirty notes were not disposed of in this way. 
They were sold to the people through banks and deal¬ 
ers at par and accrued interest, and the government 
paid a commission to the agents who were engaged 
in their sale. It is probable that no loan negotiated 
bv the United States was ever so widely advertised 
as was the seven-thirty loan. Agents all over the 
country spent large sums for newspaper advertise¬ 
ments and special notices, and many thousands of 
dollars were expended for flaming posters, which ap¬ 
peared everywhere. All this expenditure would have 
been unnecessary if the notes had been issued as 
monev. * * * There was no talk in those da vs 

•> 4/ 

about their being issued as money. * * * They 

were issued only to persons who had money to lend, 
and were daily bought and sold at prices which were 
hardly ever the exact equivalent of par’’ (10). 


ERRORS OF POPULISM. 


43 


Populists publish an alleged letter of Mr. Spin¬ 
ner s, written in 1S7G, in which he says that the 7-30 
notes were “intended, prepared, issued and used as 
money.” If this letter is genuine it is in absolute and 
direct conflict with Spinner’s own official reports made 
while he was treasurer of the United States. It is 
irrefutably contradicted by the official reports of Mr. 
Fessenden and Mr. McCulloch who issued the notes, 
and by the official reports of other government offi¬ 
cers made at the time, and by the very laws under 
which the notes were authorized. 

Populist writers seek to create the impression that 
the bonds, which were issued in denominations as low 
as $50, were within the financial reach only of wealthy 
“Shylocks.” At the same time, with strange incon¬ 
sistency, they insist that the 7-30s, almost all of which 
were issued in denominations of $100 and upwards, 
and the certificates of indebtedness, which were issued 
in denominations of $1,000 and upwards, were in com¬ 
mon use as money among the people generally. 

The 7-30 notes were not a legal tender. 

Thev were not issued as money. 

They were used as money only to a slight extent. 

They could not, in 1865-6G, have been a part of the 
reserves of the national banks, for such reserves had 
to be in lawful money. 

0. “Seven Financial Conspiracies,” p. 98. 1. Lalor, vol. 

3, pp. 978, 977, 558; “National Loans of the United States,” by 
Bayley, p. 87. 2. “Call to Action,” pp. 309, 311. 3. “Labor and 
Finance Revolution,” p. 290. 4. Cong. Record, 53rd congress, 

1st session, part 3, appendix, pp. 305, 557. 5. Cong. Globe, 1864- 
65, part 2, appendix, p. 128; U. S. Statutes at Large, vol. 13, pp. 
218, 469. 6. Cong. Globe, 1863-64, part 4, appendix, p. 206. 7. 

Cong. Globe, 1864-65, part 2, appendix, p. 28. 8. “United States 
Notes,” pp. 110, 85. 9. “American People’s Money,” p. 41. 10. 
“Letter of Hon. Charles Foster to Hon. John B. Allen,” treasury 
publication, pp. 5, 6. 11. Cong. Globe, 1865-66, part 5, appen¬ 

dix, p. 43. 


44 


ERRORS OF POPULISM. 


CHAPTER VI. 

THE “CONTRACTION OF THE CURRENCY” WAS MAINLY 
THE HONEST PAYMENT OF GOVERNMENT DEBTS. 

The public debt of the United States reached its 
maximum August 31, 1805, (1) when it was: 


Funded debt.$1,109,568,191 80 

Matured debt. 1,503,020 09 

Suspended requisitions. 2,111,000 00 

Temporary loans. 107,148,713 16 

Certificates of indebtedness . 85,093,000 00 

Seven-thirty notes. 830,000,000 00 

Fractional currency. 26,344,742 51 

United States notes. 433,160,569 00 

Compound interest notes. 217,024,160 00 

Five per cent, notes . 33,954,230 00 


Total ...$2,845,907,626 56 

Cash in treasury . 88,218,055 13 


Net debt.$2,757,689,571 43 


The annual interest charge was $150,000,000. 

The temporary loans were represented by certifi¬ 
cates, issued in denominations of not less than $100, 
for greenbacks deposited with the government. They 
were issued solely for the purpose of supplying the 
temporary needs of the government, and hence their 
name. They bore not to exceed C> per cent, interest 
and were payable in thirty days from time of deposit, 
after a notice of ten days. 

The certificates of indebtedness, instead of being 
issued to those who had loaned money to the govern- 



















ERRORS OF POPULISM. 


45 


ment, were issued to public creditors who desired to 
receive them in satisfaction of settled and audited 
claims. They were issued for the whole amount due, 
or parts thereof, not less than $1,000, and were paya¬ 
ble one year from date, or earlier, at the option of the 
government. They bore 6 per cent, interest, and ma¬ 
tured at various times between August, 1865, and 
Mav, 1867. 


The 7-30s became due in 1867 and 1868, and were 

convertible at maturity, at the option of the holder, 
into bonds. 

The compound interest notes became due in 1867 
and 1868. The interest was compounded semi-annu¬ 
ally. 

The 5 per cent, notes were all due by December 
1, 1865. 


All these temporary interest-bearing debts of the 
government were payable in lawful money. 

In addition to these debts $18,415,000 of the funded 
debt became due in three years. 

Thus it will be seen that, taking no account of the 
greenbacks, if the credit of the government was to be 
kept good, and its word preserved inviolate as it had 
been during the darkest days of the war, it would not 
only have to pay the ordinary running expenses of 
the government and the enormous interest on the pub¬ 
lic debt, but would also be compelled to pay or fund 
nearly $1,300,000,000 of the principal of the public 
debt by October, 1868. 

Populist leaders (3) assert that all the items except 
the first three in the public debt statement for August 
31, 1865, were money and in general use among the 
people. They charge that the Republican party, un¬ 
der the influence of the money power, for the purpose 


46 


ERRORS OF POPULISM. 


of impoverishing the masses and enriching the few, 
destroyed the greater part of this money. The truth 
is that what Populist leaders call contraction of the 
currency was, for the most part, simply the honest 
payment of government debts—these debts being in 
the form of notes that never were intended as money 
and never were used as money. 

By the law of March 3, 1865, (4) which had the 
hearty approval of President Lincoln, authority was 
given to the secretary of the treasury to exchange 
bonds for “treasury notes, certificates of indebtedness 
or certificates of deposit or other representatives of 
value which have been or may be issued under any 
act of congress.” On August 31, 1865, the temporary 
interest-bearing notes of the government amounted to 
$1,273,000,000. Under this law the secretary had 
power to fund all of them; in other words, to exchange 
long-time notes of the government for short-time 
notes. In the fall of 1865 the secretary proceeded to 
retire legal tender interest-bearing notes at the aver¬ 
age rate of several million dollars a month (5). 

But the secretary wished not only to pay or fund 
the interest-bearing notes, but also to decrease the 
volume of greenbacks—the currency as he understood 
the term. Accordingly he asked congress for in¬ 
creased authority. 

The members of the lower house are in close con¬ 
tact with the people, and almost invariably seek to 
carry out the wishes of their constituents. That the 
people were in favor of the financial measures proposed 
by the secretary is shown by the resolution that passed 
the house December IS, 1865, by the overwhelming 
vote of 144 to 6, “Resolved, That this house cordially 
concurs in the views of the secretary of the treasury 


ERRORS OF POPULISM. 


47 


in relation to the necessity of the contraction of the 
currency, with a view to as early a resumption of 
specie payments as the business interests of the coun¬ 
try will permit” (6) 

Among those M ho voted in the affirmative was Wil¬ 
liam D. Kelley, of Pennsylvania, who seems to have 
been one of the few men in public life at that time now 
deemed worthy of the good opinion of Populists (7). 
The “money power” must have had a fearful grip on 
that congress. Usually, when it has to resort to its 
peculiar influence to secure legislation, it is content 
with a bare majority. In this case it must have been 
in a generous mood, and so bought up the entire house. 

In furtherance of this resolution, though in oppo¬ 
sition to the votes of many leading Republicans, the 
law of April 12, 18GG, was passed, giving the secretary 
authority not only to fund interest-bearing notes, but 
to retire greenbacks as well. But it provided that not 
more than $10,000,000 of greenbacks should be retired 
within six months from the passage of the act, and 
thereafter not more than $4,000,000 in any one 
month (8). 

Under these laws let us see what was done with 
the great war debt. 

When the 5 per cent, notes became due the gov¬ 
ernment paid those that were presented for payment, 
just as an honest and solvent man pays his notes when 
they become due. They w^re paid in greenbacks. 
The temporary loans matured and w r ere paid in like 
manner. So it was with the certificates of indebted¬ 
ness. This was part of the infamous crime w ith which 
Populist leaders charge the Republican party. 

But after paying these debts and all the running 


48 


ERRORS OF POPULISM. 


expenses of the government, there was not enough 
money to pay the compound interest notes and the 
7-30s when they became due. And, besides, most of 
the holders of the 7-30s demanded bonds for them in 
accordance with the law, and the stipulation on the 
back of every note. It would have been an absolute 

•j 

and shameless breach of contract for the government 
to refuse to permit the holders of the 7-30s to ex¬ 
change them for bonds. Neither could the govern¬ 
ment have honorably refused to pay the compound in¬ 
terest notes when they matured or else give the own¬ 
ers of them satisfactory securities in their place. !8o 
it was by the issuance of bonds that the most of these 
notes were retired. However, in place of part of the 
retired compound interest notes the government 
issued 3 per cent, certificates, payable on demand, 
which were, in turn, gradually paid off by 1873. A 
large amount of greenbacks were called in, but on 
February 4, 1868, their further retirement was pro¬ 
hibited. 

The most of the decrease in the temporary debts 

of the government, including greenbacks and frac- 

/ 

tional currency, had been accomplished by July 1, 
1868. And, according to Populist writers, the con¬ 
traction of the currency after 1868 did not amount to 
much. Their published tables of circulation (9) show 
that from 1868 to 1874, a period of six years, the cur¬ 
rency was contracted only $38,000,000. Therefore, a 
general summing up of the situation on July 1, 1868, 
will give us a practically complete knowledge of that 
which is called by Populists the contraction of the 
currency. 

According to the report of the secretary of the 


ERRORS OF POPULISM. 


4<t 


treasury for December 1, 1868, the government obli¬ 
gations named in the public debt statement of August 
31,1865, and counted as money by Populists, were out¬ 
standing on July 1, 1868 (10) in the following amounts: 


Temporary loans.$ 797,029 00 

Certificates of indebtedness . 18,000 00 

Seven-thirty notes . 37,717,650 00 

Fractional currency . 32,626,951 75 

United States notes. 356,141,723 00 

Compound interest notes. 28,161,810 00 

Five per cent, notes . 555,492 00 


Total .$456,018,655 75 


The net government debt was $2,505,200,516.94. 

Compare this table with the one given at the 
first of the chapter. It will be seen that the net 
government debt had been reduced $252,000,000, 
and that the temporary debts of the government, 
including greenbacks and fractional currency, had 
been reduced by the enormous sum of $1,276,000,000. 

Between August 31, 1865, and July 1, 1868, the 
bank note circulation had slightly increased; and 
$50,000,000 of 3 per cent, certificates, used to a con¬ 
siderable extent as money, had been issued. Making 
due allowance for these two items, there had been, in 
the short space of thirty-four months, from August 
31, 1865, a net reduction in the volume of bank notes, 
and of government oligations called money by the 
Populists, of over $1,200,000,000. Of the $2,000,000,- 
000 claimed by Populists to have been in circulation 
in the fall of 1865. more than $1,200,000,000 had been 
destroyed in less than three years. 

It would seem to be apparent to every reasoning 
mind that in no country could 60 per cent, of the 
money—$6 out of every $10—be destroyed in tliirty- 


K P — 4 











50 


ERRORS OF POPULISM. 


four months without involving all the commercial and 
industrial interests of the country in overwhelming 
ruin. And the disastrous effects would be felt at 
once; they could not possibly be delayed for years. 
The business prostration would be immediate and uni¬ 
versal. 


Were the years 1866, 1867, 1868 disastrous ones? 

According to the highest Populinst authority (11) 
the business failures of the entire countrv during 
those years involved a loss of only $168,000,000, an 
average of $56,000,000 a year. This is an exceedingly 
favorable showing, as will be seen by an examination 
of a statement of the business failures of the United 
States, with liailities involved, taking place each year 
since 1857, prepared by Dun’s Commercial Agency, 
which, with Bradstreet’s, is the best authority on 
earth as to the business condition of this country now 
and for many years past (12). 

Nor were the years 1869, 1870, 1871 marked by 
special financial disasters or business failures. Had 
there been the wholesale destruction of money claimed 
by Populists, before half those years had passed finan¬ 
cial disaster would have swept the country like a 


cyclone. 

t/ 

These facts, of themselves, prove that the asser¬ 
tion of Populist leaders, that all the temporary debts 
of the government at the close of the war were money, 
and that there was $2,000,000,000 of money in circu¬ 
lation at that time, is wildly absurd. 

There was some contraction of the currency; but 
the extent of the contraction was slight compared 
with its extent as set forth by Populist leaders. The 
great bulk of tin* interest-bearing notes of the gov¬ 
ernment never were currency; hence their payment 


errors of populism. 


51 


or funding can not properly be called a contraction 
of the currency. 

I lie author believes that the retirement of green¬ 
backs at that time was unwise, and that the payment 
and retiring of the interest-bearing notes would have 
been sufficient. If the right of the holders of green¬ 
backs to exchange them at par for bonds, which was 
taken avar on July 1, 1863, had been restored after 
the w ai, greenbacks would have appreciated, as com¬ 
pared with gold, along with the bonds. This would 
have been better than the attempt to appreciate their 
value by decreasing their volume. 

But if a mistake was made it was honest!v made; 
it was not part of a scheme to rob the people. Popu¬ 
list leaders are too ready to account for legislation 
that does not suit their notions by claiming that the 
legislation was prompted by dishonest and unworthy 
motives. The men who were at the head of this gov¬ 
ernment at the close of the war and directed the man¬ 


agement of the public debt were, on the whole, a very 
able and patriotic set of men. It may be that if the 
present leaders of the Populist party had had control 
of the government at that time they would have man¬ 
aged it more honestly and more wisely than it was 
managed. But this does not seem probable. 

1. Cong. Globe, 1867-8, part 5, appendix, p. 24; “Finance 
Report,” 1867, pp. 3, 5. 3. Weaver, “Call to Action,” p. 310; 

Heath, “Labor and Finance Revolution,” p. 50; Peffer, Cong. 
Record, Fifty-third congress, first session, part 3, appendix, p. 
306; Davis, same, p. 557. 4. Cong. Globe, 1864-65, part 2, appen¬ 
dix, p. 128. 5. Cong. Globe, 1865-6, part 5, appendix p. 39. 6. 
Cong. Globe, 1865-6, part 2, p. 1,432. 7. “Seven Financial Con¬ 
spiracies,” pp. 77, 52; “Labor and Finance Revolution,” p. 93. 
8. Cong. Globe, 1865-6, part 5, appendix, p. 317. 9. “Conspi¬ 
racies,” p. 85; “Labor and Finance Revolution,” p. 191. 10. 

Cong. Globe, 1868-9, part 3, appendix, p. 16: “Finance Report,” 
1868, p. 24. 11. “Conspiraries,” p. 38. 12. “Dun’s Review,” 

January 13, 1894, p. 3. 


ERRORS OF POPULISM. 


r,9 

'JZi 


CHAPTER VII. 

THE CIRCULATION IN 1895 AND 18G5 COMPARED - MORE 

MONEY PER CAPITA, AND BETTER, IN 1895. 

It lias been shown conclusively that Populist esti¬ 
mates as to the amount of money in the country in 
18G5-G are grossly exaggerated. 

The way now seems clear for a correct compari¬ 
son between the amount of money in circulation at 
that time and at the present time. 

The expression, money in circulation, is here used 
as it is in the government reports as meaning, money 
in the countrv outside of the United States treasury. 

«. t/ 

As has been before stated, Populist leaders (1), 
when speaking of 18G5-G, universally nse this expres¬ 
sion as meaning the total amount of money in the 
country. They make no deductions whatever from 
this total sum. When they speak of the present time 
they attach an altogether different meaning to the ex¬ 
pression. They use it as meaning the total amount 
of money in the country, less the amount in the United 
States treasury, less the amount held bv national 
banks as reserves, less the amount they guess has 
been lost and destroyed, less the amount they guess 
is held by private banks as reserves, less the amount 
they guess is hoarded. 

Donnelly considers his own estimate as to the 
amount of gold in the country to be better than that 
of the mint and treasury officials, and says, “A gold 
coin is something rarely or never seen by the citizens 


ERRORS OF POPULISM. 


53 


of our country.” He entertains the absurd opinion 
that one-tenth of all the silver coined in this country 
since 1878 has been lost. 

the use of this expression with a double meaning 
greatly aids Populists in making out a very large cir¬ 
culation in 1865-6, and a very small one at the pres¬ 
ent time. Of course, this method of comparison is 
y eiJ unfair; but this is no objection to it in the eyes 
of a Populist demagogue. 

If it is right, in estimating the amount of money in 
circulation now, to make the various deductions named 
then it is right to make them in estimating the amount 
of money in circulation in 1S65-6. It does not make 
so much difference what meaning is given to the ex¬ 
pression, but it is essential, in order to be fair, that this 
meaning should be fixed and definite—in other words, 
that the test employed should be the same for both 
periods. 

Of all men, living or dead, the secretary of the 
treasury in 1865 was in the best position to know the 
facts in regard to the circulation at that time. And 
this fact is recognized by Populist writers. They 
know that people will accept his statement's, made in 
his official reports at the time, as the very best evi¬ 
dence—evidence that must be accepted as true unless 
impeached by other evidence that is positively over¬ 
whelming. Failing to find anything there with which 
to substantiate their preposterous claims, at least two 
of them—Emery and Smith—have published a forged 
quotation from the report of Secretary McCulloch for 
December, 1865, and sent it forth as evidence. They 
knew that exceedingly few people have access to that 
report and, on that account probably, thought the 


54 


ERRORS OF I’OPULISM. 


forgery would escape detection. Special attention 
was called to this forgery in a former chapter. 

In his report of December, 1865, (2) McCulloch 
made an estimate of the total amount of the paper 
money of the country on October 31, 1S65, when the 
volume of government notes was largest. So far as 
known to the author, that is the only time in that 
vear for which he made anv such estimate. This 
estimate of McCulloch's forms the most reliable basis 
upon which to calculate the amount of money then 
in circulation. Therefore, the two dates selected for 
the comparison are October 31, 1S65, and October 31, 
1895, exactly thirty years later. 

Onlv three items are lacking in McCulloch's report 
to give us his opinion as to the exact circulation on 
October 31, 1865, namely, the cash in the treasury, the 
coin circulation, and the amount of 7-30s used as 
monev. 

On the first of that month there was $56,236,440 
in the treasury, and it will be reasonably accurate to 
count that as the amount in the treasury on the last 
day of the month (5). 

Government reports, which do not seem to be con¬ 
troverted, state that at that time f25,000,000 in coin 
was in circulation on the Pacific Coast. It is well 
known that throughout the. rest of the country coin 
was not in circulation. 

In his report McCulloch says of the 7-30 notes that 
“manv of the small denominations” were in use as 
money. Since the smallest denomination was $50; 
since neither the comptroller of the currency nor the 
treasurer of the 1 nited States at that time reported 
the 7-30s as being appreciably in circulation; since 
the secretary in the same report stated that the vol- 


ERRORS OF POPULISM. 


55 


nme of paper money “had reached the startling amount 
of upward of $700,000,000”—an estimate altogether 
too low had he considered the 7-30s in use as money 
to any great extent—since he estimated that only 
$30,000,000 of the 5 per cent, and compound interest 
notes, which were much better adapted for use as 
money than the 7-30s, were in use as money; and in 
view of the nature and character of the 7-30 notes, 
surely it would be a most liberal estimate to count 
$30,000,000 of the 7-30s as being used as money at that 
time. 

With these three items thus determined, taking 
the figures as to the other items from McCulloch’s 
report, the amount of money in circulation October 
31, 1865, was: 


Greenbacks and fractional currency.$454,218,038 20 

National bank notes ... 185,000,000 00 

State bank notes . 65,000,000 00 

Five per cent, and compound interest notes. 30,000,000 00 

Coin.' 25,000,000 00 

Seven-thirty notes . 30,000,000 00 


Total .$789,218,038 20 

Deduct cash in treasury. 56,236,440 00 


Money in circulation .$732,981,598 20 


Estimated population, 34,800,000. 

Circulation per capita, $21.06. 

But in October, 1865, it took $1.45 (3) in green¬ 
backs to buy $1 in gold; and some of the state bank 
notes were not as good as greenbacks. Reducing the 
paper money to a coin basis, the circulation amounted 


to only $488,263,171, or $14.03 per capita. 

According to the official report of John G. Carlisle,, 
secretary of the treasury, money was in circulation 













56 


ERRORS OF POPULISM. 


in the United States, October 31, 1S95, in kinds and 
amounts as follows: 


Gold coin .$ 475,181,593 

Standard silver dollars. 58,354,092 

Subsidiary silver. 63,832,759 

Gold certificates. 50,417,659 

Silver certificates . 333,456,236 

Treasury notes. 114,526,669 

United States notes . 238,986,280 

Currency certificates . 56,740,000 

National bank notes . 207,364,028 


Total .$1,598,859,316 


Estimated population, 70,378,000. 

Circulation per capita, $22.72. 

We have more money per capita than we had at 
the close of the war. 

Since all these different kinds of money are as 

*/ 

good as gold in every part of the country we have 
better money than we had then. 

Gold coin is a full legal tender for all debts, pub¬ 
lic and private. 

Silver dollars are a full “legal tender at their nom¬ 
inal value for all debts and dues, public and private, 
except where otherwise expressly stipulated in the 
contract” (4). 

Subsidiary silver—half dollars, quarters and 
dimes—have, since 1879, been a legal tender to the 
amount of $10 (4). 

Five-cent and one-cent pieces are called minor 
coins. They are legal tender to the amount of 25 
cents. The 5-cent pieces are made of 75 parts of cop¬ 
per and 25 parts nickel. The 1-cent pieces are made 
of 95 parts copper and 5 parts tin and zinc. 

The government will redeem subsidiary silver 
coins, when presented in sums of $20 or any multiple 














ERRORS OF POPULISM. 


57 


thereof, in lawful money; also minor coins when pre¬ 
sented in sums of not less than $20. 

Gold and silver certificates are not a legal tender, 
but are “receivable for customs, taxes and all public 
dues.” They are issued for gold coin and silver dollars 
deposited with the government. The gold certificates 
are redeemed in gold coin on demand, and the silver 
certificates in silver dollars. For the purpose of re¬ 
demption an amount of coin exactly equal to the 
amount of outstanding certificates is constantly kept 
on hand by the government. 

Treasury notes, issued in payment of silver bul¬ 
lion, are receivable for customs, taxes and all public 
dues, and are legal tender to the same extent as silver 
dollars. Thev are redeemable on demand in gold or 
silver coin, at the discretion of the secretary of the 
treasury. 

United States notes are a full legal tender for all 
debts, public and private, except duties and interest 
on the public debt. On presentation in sums of not 
less than $50 the government redeems them in coin. 

Currency certificates, in denominations or not less 
Ilian $5,000, are issued to national banks upon de¬ 
posits of United Slates notes with the government. 
The United States notes deposited are held as a spe¬ 
cial deposit for the redemption of the certificates on 
demand. The certificates are used for bank reserves 
and settlements. 

National bank notes are receivable for all dues to 
the government except duties on imports; and tor all 
debts owing by the government except interest on the 
public debt, and redemption of greenbacks. They are 
redeemable on demand in lawful money by the issuing 
banks, or, ultimately, by the government. 


58 


ERRORS OF POPULISM. 


In determining the stock of gold coin in the United 
States the actual amount of gold coin in the treasury 
and in national banks on June 30, 1872, and $20,000,- 
000 estimated at that date as the minimum amount 
in circulation in the states of the Pacific Coast, a total 
of $135,000,0000-—was taken as a basis. 

Since that time the official estimates have been 
compiled by adding to the initial stock the coinage of 
the mints, not including recoinage, and the gain or loss 
by import or export as registered at the custom 
houses. An average annual allowance, however, of 
$3,500,000, has been estimated as the amount of our 
gold coins used in the industrial arts. 

The coinage of silver dollars since March 1, 1S7S, 
and the subsidiary silver coinage since 1873, at which 
date the estimated amount was $5,000,000, together 
with the annual gain or loss by coinage or import— 
after an annual deduction of $200,000 for use in the 
industrial arts—is taken as the estimated stock of 
silver coin in the United States (4). 

1—Weaver, “Call to Action,” pp. 310, 312; Emery, “Seven 
Financial Conspiracies,” p. 100; Donnelly, “American People’s 
Money,” pp. 40, 83. 2—Chapter 4. 3—Bureau of Statistics 
Quarterly Reports, 1878-9, p. 116. 4—“Coinage Laws of the 
United States, 1792 to 1894,” pp. 64, 125, 68. 5—Cong. Globe, 

1865-6, part 2, p. 1454. 



ERRORS OF POPULISM. 


59 


CHAPTER VIII. 

THE CREDIT STRENGTHENING ACT.-THE PEOPLE FAVORED 

IT.-U. S. GRANT COULD NOT BE BRIBED. 


Tlie first act of congress that became a law by the 
signature of President Grant was the credit strength¬ 
ening act of March 18, 1869. The essential part of 


that act is as follows: 

“In order to remove any doubt as to the purpose of the gov¬ 
ernment to discharge all just obligations to the public creditors, 
and to settle conflicting questions and interpretations of the 
laws by virtue of which such obligations have been contracted, 
it is hereby provided and declared that the faith of the United 
States is solemnly pledged to the payment in coin or its equiva¬ 
lent of all the obligations of the United States not bearing inter¬ 
est, known as United States notes, and of all the interest bear¬ 
ing obligations of the United States, except in cases where the 
law authorizing the issue of any such obligations has expressly 
provided that the same may be paid in lawful money or other 
currency than gold or silver. * * * * And the United 

States also solemnly pledges its faith to make provision at the 
earliest practicable period for the redemption of the United 
States notes in coin.” 


At that time gold was at a premium over green¬ 
backs, and it was easier to pay the bonds in paper 
money than it was to pay them in coin. Populist 
writers assert that the credit strengthening act was 
the result of a gigantic conspiracy to swindle and rob 
the people for the benefit of the bondholders. They 
claim that with the presidency of the United States 
as a bribe the co-operation of Grant in this infamous 
crime was secured. 


60 


ERRORS OF POPULISM. 


Heath (1) says that this arrangement between the 
bondholders on the one side, and Grant and the lead¬ 
ers of the Republican party on the other side, was 
“one of the most damnable acts of x>olitical corrup¬ 
tion, and the most villainous betrayal of public trust 
ever practiced upon an unsuspecting and confiding 
constituencv; and. when fully understood, it will brand 
with eternal infamv everv name in connection with 
the disreputable transaction.” He declares “The 
Republican party nominated IT. S. Grant on the urgent 
solicitation and petition of forty capitalists of Xew 
York city, who represented in the aggregate about 
$500,000,000.” 

Schilling (2) speaks of Grant as being subservient 
to the wishes of “the conspirators against the welfare 
of the country,” and savs, “A very conservative esti- 
mate would be to say that this conspiracy of the money 
sharks cost the people of the United States $1,000,000,- 
000 .” 

Emery (3) agrees with Heath that this step in the 
“infernal system of legalized robbery” cost the people 
about $600,000,000, and says, “Further, we have unde¬ 
niable proof that the act was secured through the 
most soulless strategy, and that Grant, Sherman and 
Morton were parties to it. * * * Circumstantial 

evidence also proves beyond doubt that the election 
of Grant and the defeat of Seymour was a bargain and 
sale between the leaders of the old parties, and the 
most villainous betrayal of public trust ever practiced 
upon an unsuspecting people. * * * The blood 

curdles to think of Washington and of that fratricidal 
conspirator at the head of the same government.” 

The sentiment of Populist writers, above quoted, is 
believed to be fairly representative of the sentiment 


errors of populism. 


61 


Of Populist leaders generally with reference to this 
matter. 

It is the purpose of this chapter to show that the 
credit strengthening act was passed, not as the result 
of a conspiracy, but to carry out the will of the people 
as expressed at the polls after a full and thorough dis¬ 
cussion of the question all over the land; and that 
after it was passed the people again expressed in un¬ 
mistakable manner their approval of the party that 

passed it, and of the president by whose signature it 
became a law. 

After the close of the war the question gradually 
grew in importance as to whether the 5-20 bonds were 
payable in lawful money,.that is, in greenbacks, or in 
coin. It was a question upon which there could be an 
honest difference of opinion; the laws under which the 
bonds were issued were silent as to the medium of pay¬ 
ment. 

According to Senator Jones, of Nevada, who now 
proudly claims to be a Populist, between 1862 and 1S68 
the government sold bonds to the amount of $2,049,- 
975,700, for which it received in gold only $1,371,424,- 
238, which is at the rate of 67 cents in coin on the dol¬ 
lar (4). It seemed hard that the government should 
have to pay the bonds at the rate of 100 cents in coin 
on the dollar. 

Some, looking only to the very strictest letter of 
the law, thought the bonds should be paid in green¬ 
backs. Others believed that by the implied contract 
and understanding between the government and those 
who purchased the bonds; by the uniform usage of the 
government before and during the war; by the decla¬ 
rations of our officials having charge of the loans; by 
the representations of agents duly authorized by the 


62 


ERRORS OF POPULISM. 


government to sell the bonds, we were in honor bound 
to pay the bonds in coin. In the early part of 1868 the 
question was taken up m congress and discussed at 
great length. John Sherman at that time took the 
position that the bonds should be paid in greenbacks; 
but also maintained that it was the duty of the gov¬ 
ernment to advance the greenbacks to par in coin (5). 
Senator Morton from the first to last favored the pay¬ 
ment of the bonds in greenbacks. But, almost with¬ 
out further exception, the leading Republicans of the 
country believed that the bonds should be paid in coin. 

The only question was with reference to the 5-20 
bonds. Some of the bonds issued during the war 
were, in express terms, payable in coin; and no one, ex¬ 
cept some Populists of today, ever thought it right for 
them to be paid in anything but coin. 

The Republican national convention which met in 
Chicago May 20, 186S, took the position that the bonds 
should be paid in coin. This was strongly urged by 
Gen. Hawley in his speech on taking the chair. He 
said: “For every dollar of the national debt the blood 
of a soldier is pledged. Every bond, in letter and in 
spirit, must be as sacred as a soldier's grave.” The 
platform declared: “We denounce all forms of repu¬ 
diation as a national crime; and the national honor 
requires the payment of the public indebtedness in 
the uttermost good faith to all creditors at home and 
abroad, not only according to the letter, but the spirit 
of the laws under which it was contracted." 

On July 4, 1868, the national Democratic conven¬ 
tion met in New York and nominated Seymour for 
president. The Democratic party had always been a 
“hard money” party. It had opposed most strongly 
the issuing of greenbacks; bv its denunciation of them 


ERRORS OF POPULISM. 


63 


it had helped in some degree to depress their value, 
lint at this time the party made a total change of front, 
and took the position that the bonds should be paid in 
ftitenbacks. the platform declared* i *'W here the 
obligations of the government do not expressly state 
upon their face, or the law under which they were 
issued does not provide that they shall be paid in coin, 
they ought, in right and in justice, to be paid in law¬ 
ful money of the United States.” 

The people knew exactly the position of Grant and 
the Republican party with reference to this matter. 
It was one of the two main issues between the parties 
in the campaign of 1S68. On the floors of congress, 
in the newspapers, and on the stump the question was 
discussed in all its phases. Any plan for getting out 
of debt easily finds ready support among a large class 
of people who look at the result rather than at the 
means employed to attain the result. With their 
campaign cry, “Tlu* same currency for the bondholder 
and the plowholder,” the Democrats caught many 
votes. 

But at the election Grant received an electoral ma¬ 
jority over Seymour of 134, and a popular majority of 
over 300,000. The voters of that time—nearly thirty 
years ago—knew more about that question than do 
the voters of today. They knew the understanding 
with which purchasers had taken the bonds. Like a 
vast jury tliev considered the matter, and settled it in 
favor of coin payment of the bonds. They, in effect, 
said to Grant and the Republican party, “The position 
that vou have taken is the right one. The bonds 
should be paid in coin.” 

And so, it was in harmony with the declared posi¬ 
tion of the Republican party and in harmony with 


G4 


ERRORS OF POPULISM. 


the expressed will of the people, that congress passed 
the credit strengthening act. It passed both houses 
of congress by a big majority. 

When the credit strengthening act was passed the 
greenback dollar was worth only 76 cents in gold. 
Within a year, under the favorable influence of that 
law, it was worth 89 cents in gold (7). At the same 
time government bonds rose to par in gold, thus mak¬ 
ing possible the refunding of the public debt at lower 
rates of interest. 

John A. Logan, in discussing the question, said: 

“The question as to the currency in which our bonds shall 
be paid, which has been so much discussed in this hall and 
throughout the country during the last two or three years, can 
be as well settled now as at any other time. I presume that 
no wise man in the country believes at the present day that the 
policy of the government will be to discharge its indebtedness 
by the issue of new obligations. * * * * Sir, it appears to 

me it is nonsense for us to discuss this question any longer: 
It is nonsense for us to talk of paying $2,000,000,000 of bonds 
with $2,000,000,000 of greenbacks. * * * * It is highly 

befitting that 1 we should proclaim to the world that we intend 
to pay our obligations in the currency of the world; that we 
do not intend that hereafter the bonds of our government shall 
be worth in London but 80 cents on the dollar, while the bonds 
of the state of Massachusetts are worth 105. There is no reason 
for this depreciation of our bonds in the markets of the world 
except that the discussions we have had on the question have 
raised a doubt as to the currency in which we intend to dis¬ 
charge our national obligations” (6). 

Again, in 1872, after passing the credit strength¬ 
ening act, Grant and the Republican party, upon their 
record, asked to be continued in power. And the 
voters of the nation, by a majority of over 750,000— 
the largest ever received by any president—re-elected 
Grant, and put the stamp of their approval upon the 
acts of the party. If the credit strengthening act was 


errors of populism. 


65 


‘•one of the most damnable acts of political corrun- 

ifT' • f if a <<m ° St Vlllainous bet rayal of public trust;” 

‘ the people were robbed of hundreds of millions 
ot dollars, why was it that the voters of the country 

';";r rs a ^ soIutel y overwhelming, approved and 
atificd the villainy? Why did they not, at the polls 
K<_, administer a stinging and effective rebuke 

to the president and the party that had thus betrayed 
the people? J 

It cannot be successfully contradicted that if, as 
lopulists say, Grant and the leaders of the Kepubli- 
can Party were guilty of a great crime, the greater 
part of the intelligent voters of the country were aid¬ 
ers and abettors of the crime. 

Was Grant nominated at the dictation of capital¬ 
ists? irom the intelligence of the country comes the 
answer, Xo. 


Could he have been bribed either with office or 
with money to enter into any conspiracy to rob his 
countrymen and betray their interests? From the 
loyalty of the nation that he led to victory; from those 
who went down in defeat before him, comes the an¬ 
swer, Xo. And the men who seek, by vilification of 
such men as Grant, to build up a political party will 
never build it up. 

It is doubtless true that many capitalists desired 
the nomination of Grant—and this is to Grant’s credit. 
It was felt that with him at the head of the govern¬ 
ment property interests would be safe. It will be a 
long, long time before men who have investments that 
may be ruined by wild legislation, and property that 
may be destroyed by lawlessness, will be in favor of 
intrusting the great business interests of this country 
into the keeping of men like those who now lead the 


E p—5 


m 


ERRORS OF POPULISM. 


Populist party. At the Chicago convention of 1SG8, 
and for many months before, among Republicans, no 
name but Grant’s was mentioned in connection with 
the presidency. No other name was presented to the 
convention. He was not so much the choice of East¬ 
ern capitalists as he was of the million farmers on the 
Western prairies. He was unanimously nominated 
by acclamation amidst the greatest enthusiasm. 

Far away to Ihe East, in the great metropolis of 
the nation he preserved, in Riverside Park, his name 
and fame forever secure from the venomous attacks 
of slander, his memory and the grateful appreciation 
of his services as sure and as constant in the hearts of 
the people as the tides that ebb and flow at his feet, 
let the dead hero sleep. 

1—“Labor and Finance Revolution,” pp. 296, 295. 2—“The 

Silver Question,” pp. 7, 8. 3—“Seven Financial Conspiracies,” 

pp. 43, 46. 4—Cong. Record, Fifty-third Congress, first session, 

part 3, appendix, p. 665. 5—Sherman’s “Forty Years in the 

House, Senate and Cabinet,” Vol. I., p. 438. 6—Cong. Globe, 

February 24, 1869, p. 1,536. 7—Bureau of Statistics Quarterly 
Reports, 1878-9, p. 116. 




ERRORS OF POPULISM 


67 


CHAPTER IX. 


THE CREDIT STRENGTHENING ACT WAS RIGHT.-THAD. 

STEVENS, CHASE, FESSENDEN, MCCULLOCH. 


In the preceding chapter it was shown that the 
Republican party, in order to give effect to the will 
of the people as expressed at the polls, passed the 
credit strengthening act declaring that the green¬ 
backs, and all interest-bearing obligations of the gov¬ 
ernment not expressly made payable in lawful money, 
were payable in coin. It was shown that the voters 
of the country, in overwhelming majorities, approved 
and ratified that act. 

An examination of that part of our financial his¬ 
tory (1) relating to the various issues of bonds during 
the war period shows that the Republican party had 
the best and most honorable of reasons for taking the 
position it did with reference to the coin payment of 
the principal of the bonded debt. 

As to the interest on the bonded debt there was 
no dispute. All agreed that, with trifling exception, 


it was payable in coin. 

The first loan was negotiated under the act of July 
17, 1861, supplemented by that of August 5, 1861. 
It provided for the issuance of 6 per cent, bonds, run¬ 
ning twenty years, and of 7-30 notes, running three 
years, fundable at maturity into such bonds. Fifty 
million dollars of bonds were issued, and $139,999,750 
of notes, almost all of which were funded into bonds. 


68 


ERRORS OP POPULISM. 


The total amount of bonds issued under this act was 
$189,321,350, for the greater part of which the govern¬ 
ment received coin. From the adoption of the consti¬ 
tution up to the time when this loan law was passed, 
and for several months after, nothing was legal tender 
in this country but gold and silver. The bonds of the 
United States had uniformly been paid in coin. The 
country was upon a specie basis. The proposition to 
issue legal tender paper money had not been made. 

Is there any room to doubt that the understanding 
between the government and those who lent it money 
—mostly coin—under this law, was that the debt 
should be paid in coin? If that was the understand¬ 
ing, was not the Republican party right in 1869 when 
it declared that those bonds should be paid in coin? 

The next loan bill, of February 25, 1862, authorized 
the issuance of $500,000,000 of 6 per cent, bonds, re¬ 
deemable in five, and payable in twenty, years, and 
hence called 5-20s. Later $15,000,000 more were au¬ 
thorized; and nearly the whole amount was issued, the • 
greater part in the summer and fall of 1863. This 
bill also authorized the issue- of $150,000,000 of green¬ 
backs, fundable at par into these bonds. The law said 
nothing as to how the bonds would be paid. But coin 
payment of interest on all the bonded debt was pro¬ 
vided for by this law. At that time it was not thought 
that more than $150,000,000 of greenbacks would be 
issued. And the apparent intention of congress, as 
shown by the law itself, was that the greenbacks 
should ultimately be converted into bonds, not that the 
bonds should be paid in greenbacks. 

It was thought that the war would soon be over, 
and specie payments resumed. Indeed, Lincoln in his 
annual message of December 1, 1862, and Secretary 


ERRORS OF POPULISM. 


69 


Chase m liis report of December 4, 1S62 (2), both urged 
a speedy return to specie payments. It was supposed 
that the country would again be on a coin basis long 
before the bonds became payable; and it was not 
thought necessary to provide that the principal of the 
bonds should be paid in coin. But, since specie pay¬ 
ments had been suspended—very temporarily, it was 
thought—it was necessary, in order to have the rate 
of interest as low as possible, to provide that the in¬ 
terest should be paid in coin. This provision did not 
mean that the principal should not be paid in coin, but 
that both principal and interest should be paid in coin. 

That this is the view that congress took of the 
matter is shown by the statements made upon the 
floor of the house when the bill was under discussion. 
Thaddeus Stevens, of Pennsylvania, speaking in favor 
Df issuing greenbacks, and of the readiness with which 
they could be converted into 5-20 bonds provided for 
by the same act, said: 

“But my distinguished colleague from Vermont fears that 
enormous issues would follow, to supply the expenses of 
the war. I do not think any more would be needed than 
the $150,000,000,000. The notes bear no interest. No one 
would seek them for investment. * * * A dollar in a 

miser’s safe unproductive is a sore disturbance. Where could 
they invest it? In United States loans at 6 per cent., redeem¬ 
able in gold in twenty years, the best and most valuable invest¬ 
ment that could be desired. * * * I pity no one who has 

his money invested in United States bonds, payable in gold in 
twenty years, with interest semi-annually. * * * Let us re¬ 

state the various projects. Ours proposes United States notes 
secured at the end of twenty years to be paid in coin” (3). 

When Mr. Chase placed these bonds on the market 
he stated officially, through the loan agents of the 
government, that the 5-20s were “a 6 per cent, loan, 
the interest and principal payable in coin (4). 


70 


ERRORS OF POPULISM. 


In the fall of 18G2 the bonds of 1842 matured, 
whose issuing* act said nothing as to the medium of 
payment. Gold was at a high premium. Neverthe¬ 
less, they were paid in gold (4). 

When the 5-20s were being sold, Mr. Whalley, a 
Boston bank president, raised the question as to how 
the bonds were to be paid. On May 20, 1803, Mr. Har¬ 
rington, assistant secretary of the treasury, replied 
in an official letter as follows: “The five-twenty sixes, 
being payable twenty years from date, though re¬ 
deemable after live years, are considered as belong¬ 
ing to the permanent loan ; and so are also the twenty- 
year sixes (1881) into which the three years’ seven- 
thirties are convertible. These bonds will, therefore, 
be paid in gold” (5). 

Samuel Hooper, a member of the ways and means 
committee, which had charge of all bills for raising 
money, in a speech in the house January 10, 1803, 
speaking of the issue of greenbacks in February, 1802, 
said: “It was under these circumstances that the act 
was massed to authorize the issue of ‘United States 
notes,’ convertible on demand, not into specie, but into 
the bonded debt of the government, bearing interest 
at the rate of 0 per cent., and representing specie, as 
has been stated, because both the principal and the 
interest as they become due were payable in coin” (0). 

On February 15, 1804, Mr. Field, assistant secre¬ 
tary of the treasury, writing about the 5-20s, said: 
“I am directed by the secretary to say that it is the 

•j 

purpose of the government to pay said bonds, like 
other bonds of the United States, in coin at matu¬ 
rity” (5). 

With such circumstances attending the issue and 
sale of these bonds, would it ever have been honorable 


ERRORS OF POPULISM. 


71 


for tlie government to pay them in depreciated paper 
money? If the government did not intend to pay the 
bonds in coin, was it not in honor bound, at the time, 
to correct the statements, made in congress and by 
the treasury officials, that the bonds would be paid 
in coin? 

The next loan bill, that of March 3, 1S63, author¬ 
ized the issue of $900,000,000 of bonds running not less 
than ten, nor more than forty, years. These were 
called 10-40s, and bore 6 per cent, interest. In the 
discussion of this bill, Mr. Stevens, either forgetting 
or ignoring the position he took the year before that 
the principal of the bonds was payable in coin, inti¬ 
mated that the 5-20s might be paid in greenbacks. In 
refutation of this, Mr. Horton, of the ways and means 
committee, said: “I wish to state here that the com¬ 
mittee of ways and means, in forming this bill, never 
dreamed that these twenty-year bonds were to be pay¬ 
able in anything other than coin until the gentleman 
from Pennsylvania (Mr. Stevens) told it yesterday 
noon the door of the house. * * * I say to the 

gentleman and to this committee that I never heard 
an expression by any member of the committee of 
ways and means of the possibility that these bonds 
were to be payable in anythipg other than coin” (7). 

Nevertheless, it was provided in this act, in order 
to remove all dispute, that the bonds should be paid 
in coin. 

But the bonds expressly made payable in coin bore 
no premium in the market over those whose issuing 
acts were silent as to the medium of payment, al¬ 
though gold was at a high premium over greenbacks. 

This fact, alone, proves conclusively that the uni- 


ERRORS OF POPULISM. 



versal understanding was that all the bonds were pay¬ 
able in coin. It is difficult to imagine just how Popu¬ 
lists would try to get around this point. 

The act of March 3,1S64, was supplementary to that 
of March 3, 1863, and like it provided that the bonds 
under it should be paid in coin. Under this act nearly 
$200,000,000 of bonds were issued. Some of them 
were 5-20s, but by far the greater part were 10-10s. 

When the next loan bill, of June 30, 1864, was un¬ 
der discussion, Mr. Brooks, of New York, moved to in¬ 
sert an amendment that the bonds should be paid in 
coin. Owing to the well understood policy of the gov¬ 
ernment to pay all the bonds in coin, Mr. Hooper, of 
the wavs and means committee, stated that such an 
amendment was unnecessary; and as proof of this he 
presented a letter, dated May 18, 1864, from Mr. 
Chase, secretary of the treasury, in which he said: 

“K has been the constant usage of the department to re¬ 
deem all coupon and registered bonds forming part of the 
funded or permanent debt of the United States in coin, and this 
usage has not been deviated from during my administration of 
its affairs. All the treasury notes and other obligations form¬ 
ing part of the temporary loan are payable and will be redeemed 
in lawful money, that is to say, in United States notes until the 
resumption of specie payments, when they also will doubtless 
be redeemed in coin or equivalent notes. The five-twenty sixes 
being payable twenty years from date, though redeemable 
after five years, are considered as belonging to the funded or 
permanent debt, and so also are the twenty-year sixes into 
which the three years’ seven-thirty notes are convertible, 
'lhese bonds, therefore, according to the usage of the govern¬ 
ment, are payable in coin. The three years’ seven-thirty treas¬ 
ury notes are part of the temporary loan, and will be paid in 

United States notes, unless holders prefer conversion to pay¬ 
ment” (8). 

After this convincing proof tliat tlie bonds were 
payable in coin, although the law did not expressly 


ERRORS OF POPULISM. 


73 


declare them so. Mr. Brooks withdrew his amend¬ 
ment. 

Mr. Fessenden, who succeeded Mr. Chase as sec¬ 
retary of the treasury, officially announced that the 
government bonds were payable in coin. In his re¬ 
port of December, 1864 (4), at the very time when large 
amounts of the 5-20s of 1864, and of 7-30s convertible 
into bonds, were being put upon the market, he says: 
“Though forced to the issue of paper for the time, the 
idea of a specie basis was not lost sight of, as the pay¬ 
ment of interest on long loans in coin was amply se¬ 
cured. And although in several of the acts authorizing 
the issue of bonds at long periods, payment of the prin¬ 
cipal at maturity in coin is not specifically provided, 
the omission, it is believed, was accidental, as there 
could have been no intention to make a distinction be¬ 
tween the different classes of securities in this regard.” 

Secretary McCulloch, who succeeded Mr. Fessen¬ 
den, made similar declarations. On November 15, 
1866, he wrote to L. F. Morton & Co., as follows: “I 
regard, as also did my predecessors, all bonds of the 
United States as payable in coin. The bonds which 
have matured since the suspension of specie payments 
have been so paid, and I have no doubt that the same 
will be true of all others. This being, as I understand 
it to be. the established policy of the government, the 
five-twenty bonds of 1862 will either be called in at the 
■expiration of five years from their date and paid in 
■coin, or be permitted to run until the government is 
prepared to pay them in coin” (4). 

The act of March 3, 1865, and the amendatory act 
of April 12, 1866, provided for the issue of vast 
amounts of bonds; and hundreds of millions of 5-20s 
were issued. 


74 


ERRORS OF POPULISM. 


When the movement to pay the bonds in green¬ 
backs had attained some importance Secretary Mc¬ 
Culloch most urgently maintained that the govern¬ 
ment could not honorably pay them in anything but 

coin. In his report of November 30, 1867, he said: 

“Now, to what is the United States pledged in regard to the 
public debt? Is it not that it shall be paid according to the 
understanding between the government and the subscribers to 
its loans at the time the subscriptions were solicited and ob¬ 
tained? And can there be any question in regard to the na¬ 
ture of this understanding? Was it not that, while the inter¬ 
est bearing notes should be converted into bonds or paid in 
lawful money, the bonds should be paid, principal as well as 
interest, in coin? Was not this the understanding of the con¬ 
gress which passed the loan bills, and of the people who fur¬ 
nished the money? * * * Was there a single subscriber to 

the 5-20 bonds or to the 7 3-10 notes, which by their terms 
were convertible into bonds, who did not believe, and who was 
not given to understand by the agents of the government, that 
both the principal and interest of these bonds were payable in 
coin? * * * Good faith and public honor, which to a nation 

are of priceless worth, require that these contracts should be 
complied with in the spirit in which they were made. * * * 

It is true that the bonds, and notes convertible into bonds is¬ 
sued after the passage of the first legal tender act, were paid 
for in a depreciated currency, and were, therefore, in fact, sold 
at a discount; but it is not denied that they were sold fairly, 
and that every one had ample opportunity to subscribe for 
them. Agencies were established, and subscriptions solicited, 
in every part of the country; and liberal subscriptions were 
regarded as evidence of loyalty. That they were paid for in a 
depreciated currency was not the fault of the subscribers. 
They were sold for the highest price that could be obtained for 
them—not chiefly to the capitalists of the cities, but to the 
men of moderate means throughout the country, who subscribed 
for them, not for speculation, but to aid the government in its 
struggles with a gigantic rebellion; and it is a significant fact 
that, with rare exceptions, the complaints that they were sold 
at a discount come from those who, doubtful of the result, 
declined to invest in them’’ (9). 


ERRORS OF POPULISM. 


75 


The foregoing' facts, and many others of a similar 
character that might be cited, prove that the Republi¬ 
can party is entitled to praise, not to denunciation, 
for passing the credit strengthening act. 

1—Bayley’s “National Loans of the United States,” p. 152; 
“Finance Report,” 1867, p. 50. 2—Cong. Globe, 1862-3, part 2, 

appendix, pp. 2, 26. 3—Cong. Globe, February 6, 1862, p. 688. 

4— Ridpath’s “Life and Work of Blaine,” pp. 259, 262, 264. 

5— Cong. Globe, July 11, 1868, p. 3,962; Bolles, Vol. III., p. 316. 

6— Cong. Globe, January 19, 1863, p. 385. 7—Cong. Globe, 

January 20, 1863, p. 412. 8—Cong. Globe, June 22, 1864, p. 

3,187. 9—Cong. Globe, 1867-8, part 5, appendix, pp. 29, 30; 

“Finance Report,” 1867, pp. 23, 24, 27. 


76 


ERRORS OF POPULISM. 


CHAPTER X. 

THE REFUNDING ACT.-A WISE MEASURE.-GREAT SAY¬ 
ING OF INTEREST.-GENERAL OWNERSHIP OF BONDS. 

One of the awful crimes that Populist leaders 
charge upon the Republican party is the refunding of 
the public debt under the law of July 14, 1870, as 
amended by the law of January 20, 1871. Many men 
whose information is limited and whose prejudice is 
easily aroused, have been misled by Populist dema¬ 
gogues with reference to this matter to such an ex¬ 
tent that what was, in reality, a very wise and bene- 
ficial measure is regarded by them as a scheme of op¬ 
pression and robbery. 

Emery (1) voices the sentiments of Populist leaders 
in the following words: “The next and fifth step in 
the infernal scheme was that of refunding the national 
debt. Few people ever comprehended the enormity of 
that crime, and never was there a deeper laid plot to 
reduce a people to abject and hopeless servitude.” 

Exactly what was it that the Republican party did 
which thus excites the ire, real or pretended, of Pop¬ 
ulist demagogues? 

In 1867 bonds to the amount of about $500,000,000 
became redeemable. That is, the government could 

pay them if it wished to do so and had the money with 

% 

which to pay them; but the holders of the bonds could 
not demand payment until a later period. Although 
the government was paying off the public debt at the 



ERRORS OF POPULISM. 


77 


rate of several million dollars a month, it did not have 

nearly enough money to pay off all the bonds as they 
became redeemable. 

It was thought that the holders of these bonds 
would be willing to exchange them at par for other 
bonds running for a longer time and bearing a lower 
rate of interest. In this way there would be a con¬ 
siderable saving of interest to the government. Vari¬ 
ous schemes for thus refunding the national debt 
were suggested. 

Thad. Stevens, in a speech in the lower house, July 
17, 1868, said: “I am in favor of a funding bill which 
shall reduce the interest on our bonds. If no person 
shall choose to fund under such a bill, no harm will 
be done; if any person does choose to fund under it 
at a lower rate of interest than we now pay, we gain 
fey it" (2). On the same day, Ben Butler, who was the 
candidate of the Greenback party for president in 
1S84, stated that he was in favor of refunding all the 
outstanding bonds into non-taxable bonds, running 
fifty years and bearing 3.65 per cent, interest. But 
Butler's plan to have the new bonds run fifty vears 
was not regarded with favor generally. It looked too 
much like a perpetual debt, which is opposed to the 
policy and practice of our government through all its 
history. 

President Grant, in his first inaugural address, 
March 4, 1869, said: “To protect the national honor, 
every dollar of government indebtedness should be 
paid in gold unless otherwise stipulated in the con¬ 
tract. Le it be understood that no repudiator of one 
farthing of our public debt will be trusted in public 
place and it will go far toward strengthening a credit 
which ought to be the best in the world, and will ulti- 


78 


ERRORS OF POPULISM. 


mately enable ns to replace the debt with bonds bear¬ 
ing less interest than we now pay.” 

After the credit strengthening act had greatly im¬ 
proved the credit of the nation and demonstrated the 
ability of the government to float its bonds at lower 
rates of interest than it was then paying, and as more 
of the outstanding bonds became redeemable, the ad- 
visabilitj- of refunding the public debt became ap¬ 
parent to everybory. A large majority in both houses 
of congress were in favor of it, but there was consider¬ 
able difference of opinion as to the length of time the 
new bonds should run. Long time bonds, of course, 
could be floated at lower rates of interest than short 
time bonds. 

By July, 1870, more than $1,000,000,000 of bonds, 
some of them bearing 5 per cent., but the most of them 
(> per cent, interest, were redeemable; and a large 
amount more would soon become redeemable. 

After much discussion the law of July 14; 1870, 
was passed (3). It was a compromise between the 
senate, favoring short time bonds, and the house, favor¬ 
ing long time bonds. It provided for the issue of 
$1,500,000,000 of bonds, bearing 5 per cent., 4J and 4 
per cent, interest, to be exchanged at par for outstand¬ 
ing 5 per cent, and 6 per cent, bonds. They were 
non-taxable, it being believed, with good reason, that if 
they were not subject to taxation the government 
could dispose of them on more favorable terms. The 
new 5 per cent, bonds were redeemable after ten years; 
the 44 per cent, bonds, after fifteen years; the 4 per 
cent, bonds, after thirty vears. 

Under this law the bonds bearing a high rate of 
interest that the government did not have the money 
to pay were gradually exchanged for bonds bearing a 


ERRORS OF POPULISM. 


79 


lower rate of interest. The process of refunding was 
interfered with by war in Europe, by the panic of 
IS<3, and by the free silver agitation in this country. 
In 1881 Secretary Windom exchanged 31 per cent, 
bonds, payable at the pleasure of the government, for 
all the outstanding 5 and G per cent, bonds. 

On July 1, 1870, before the refunding began, the 
total interest bearing debt of the government was 
$2,046,000,000, and the annual interest charge was 
$118,784,000, or $3.08 per capita. On July 1,1882, after 
the refunding process, so far as the law of 1870 is con¬ 
cerned, was complete, the total interest bearing debt of 
the government was $1,463,000,000, and the annual 
interest charge was only $57,300,000, or $1.09 per cap¬ 
ita. It will be seen that the total debt had been re¬ 
duced 28 per cent, and the annual interest charge 52 
per cent (4). 

If a man has a promissory note that he cannot pay, 
it is a very beneficial thing for him to renew it at a 
lower rate of interest. 

That is exactly what the government did by re¬ 
funding its debt. That is the very act which is so 
vehemently denounced by Populist demagogues. 

Before 1890 Emery wrote with reference to the 
bonded debt and the refunding act: “In consequence of 
this nefarious act, about $750,000,000 of the debt can¬ 
not be paid until 1907” (1). Contrary to this ignorant 
prophecy, the total interest bearing debt of the United 
States on November 30, 1891, was only $585,026,870 (5). 

That the refunding of the public debt was a crime 
against the people, is not the only delusion entertained 
by Populists with reference to the bonds. They also 
seem possessed of the idea that when the bonds were 
being issued only a few people had means enough to 


80 


ERRORS OF POPULISM. 


invest in them, and that when, by the successful ter- 
mination of the war, the bonds were enhanced in value, 
onlv a few received the benefit. And these few are 
spoken of in Populist literature as “Shylocks” and 
scoundrels. 

The fact is that the bonds were issued in denomina¬ 
tions of $50 and upwards, and hence were easily within 
the reach of the great mass of the people. The govern¬ 
ment reports show that vast quantities of the bonds 
were sold to people of moderate means, and even to 
poor people who wished a sure investment for their 
scanty savings. 

The $830,000,000 of 7-30 notes, all of them outstand¬ 
ing until 1867, were convertible at maturity, at the 
option of the holder, into bonds. Populists assert that 
the 7-30 notes, along with the greenbacks, were in 
general circulation as money all over the country. If 
this is true, surely a great number of people had an 
opportunity to obtain government bonds by exchanging 
7-30 notes for them. 

Secretary Chase, in his report of December 10,1863, 
speaking of the sale of several hundred million 5-20 
bonds that year, says that they were “distributed 
throughout the whole country, not controlled by the 
rebellion, and among all classes of our countrymen. 
The history of the world may be searched in vain for a 
parallel case of popular support to a national govern¬ 
ment’’ (6). 

In a speech in congress in 1877, James A. Garfield 
said: “I took occasion a few years since to ask the of¬ 
ficers of a bank in one of the counties in my district, a 
rural district, to show me the number of holders and 
amount held of United States bonds on which they 
collected the interest. The total amount was $116,000. 


ERRORS OF POPULISM. 


81 


And liow many people held them? One hundred and 
ninety-six. Of these just eight men held over $20,000 
apiece, and the other 188 ranged from $50 up to $2,500. 
I found in that list fifteen orphan children and sixty 
widows, who had little left them by their husbands 
and fathers’ estates, who had made the nation their 
guardian” (7). 

The refunding act was passed by very able and 
honest legislators, and was, on the whole, a very bene¬ 
ficial thing for the government. 

During the war, and for years after, there was a 
general ownership of government bonds among the 
people. 

1—“Seven Financial Conspiracies,” pp. 47, 48. 2—Cong. 
Globe, July 17,1868, p. 4,177. 3—Lalor, vol. 3, p. 560; “National 

Loans of the United States,” by Bayley, p. 170. 4—“Statistical 

Abstract of the United States,” 1894, p. 6. 5—Tribune Almanac, 

1892, p. 101. 6—Cong. Globe, 1863-4, part 4, appendix, p. 7, 

7—“Annual Cyclopedia,” 1878, p. 191. 


E P — 6 


82 


ERRORS OF POPULISM. 


CHAPTER XI. 

DID EARNEST SEYD, WITH $500,000, BRIBE CONGRESS TO 
DEMONETIZE SILVER?-FORGED EVIDENCE. 

One of the most widely circulated statements made 
by Populist speakers and writers is that about 1868 
an awful capitalistic conspiracy against silver was 
formed, and that in pursuance of this conspiracy, in 
the winter of 1872-3, Ernest Seyd, representing English 
and German bankers, came to this country with an 
immense sum of money and bribed congress to demone¬ 
tize silver. 

This charge can be best set forth in the words of 
Ignatius Donnelly, probably the most eloquent and en¬ 
tertaining demagogue in the Populist party, in a speech 
at Waterville, Minn., August 16, 1892: 

“Now, then, my friends, this is what these terrible con¬ 
spirators against mankind saw, and so they persuaded Germany 
and France to come together, and persuaded Germany to 
demonetize silver because Germany had taken from France 
all her gold, and then this Ernest Seyd came over here and 
got the United States to follow in their line. Some people 
may say, ‘Oh, well, that can’t be possible;’ my friend, a man 
named Reckenbacken, living in Denver, a mercantile man, 
went before the clerk of the supreme court and made oath 
to an affidavit, and it has been published all over this country, 
in which he swears he was in England and dined at the house 
of this Ernest Seyd, was his intimate friend in London, and 
when the conversation turned upon which was the more corrupt 
and rotten, the English parliament or American congress, 
Ernest Seyd told him in his own house just what he had done 
with that particular $500,000 of English gold, bought up the 


ERRORS OF POPULISM. 


83 


congress, and that it was the rottenest body of men on 
earth” (1). 

In the exuberance of his zeal Donnelly does not give 
correctly the name of the man who made the affidavit. 
His name is Luckenback. 

In support of this charge Populists offer three 
“proofs.” 

The first one, showing that Mr. Seyd was in this 
country when the bill for the demonetization of silver 
was before congress, is an alleged quotation from the 
speech of Mr. Hooper, of Massachusetts, as found in 
the Congressional Globe of April 9,1872, page 2304 (2), 
though Mr. Weaver says that it was on April 19, 1872, 
that Mr. Hooper made the remarks quoted. Mr. 
Hooper was chairman of the committee of coinage, 
weights and measures, and had charge of the bill, and 
made an extended speech in favor of its passage. Of 
course, a statement by Mr. Hooper, on the floor of con¬ 
gress, in April, 1872, that Mr. Seyd was then here would 

be taken as almost conclusive evidence that Mr. Sevd 

«/ 

was here at that time. 

The alleged quotation is here given as made by 
James B. Weaver, that self-appointed champion of 
truth and reform. It represents Mr. Hooper as sav¬ 
ing (3): 

“The bill was prepared two years ago, and has been sub¬ 
mitted to careful and deliberate examination. It has the 
approval of nearly all the mint experts of the country and 
sanction of the secretary of the treasury. Ernest Seyd, of Lon¬ 
don, a distinguished writer and bullionist, is now here and has 
given great attention to the subject of mints and coinage, after 
examining the first draughts of this bill, made various sensible 
suggestions which the committee accepted and embodied in the 
bill. While the committee take no credit to themselves for 
the original preparation of this bill, they have given it the 
most careful consideration, and have no hesitation in unani¬ 
mously recommending its passage as necessary and expedient.” 


84 


ERRORS OF POPULISM. 


Aii examination of the Congressional Globe of April 
19, 1S72, shows that on that day Mr. Hooper made no 
remarks whatever upon any subject before the house. 
But the Globe of April 9, 1872, page 2304, contains a 
long speech by Mr. Hooper in favor of the bill demone¬ 
tizing silver; and it is from this speech that the alleged 
quotation is made. 

As given by the Globe, that part of the speech which 
Populist writers pretend to quote is as follows: 

“The bill was prepared two years ago. and has been sub¬ 
mitted to careful and deliberate examination. It has the ap¬ 
proval of nearly all the mint experts of the country, and the 
sanction of the secretary of the treasury. Mr. Ernest Seyd, 
of London, a distinguished writer, who has given great atten¬ 
tion to the subject of mints and coinage, after examining the 
first draft of the bill, furnished many valuable suggestions 
which have been incorporated in this bill. While the com¬ 
mittee take no credit to themselves for the original preparation 
of this bill, they have given to it the most careful consideration, 
and have no hesitation in unanimously recommending its 
passage as necessary and expedient.” 

It will be noticed that the essential words, “is now 
here,-’ relied upon to prove the presence of Mr. Seyd in 
this country, are not in the remarks of Mr. Hooper as 
given in the Globe. The words ascribed to him are 
not to be found anywhere in the record of the discus¬ 
sion. In other words, some dishonest person, knowing 
that the people generally have not access to the Con¬ 
gressional Globe of 1872, has inserted the words, “is 
now here,” into the remarks of Mr. Hooper, as found in 
the Globe; and then Populist writers have published 
the forgery all over the country in substantiation of 
their preposterous charges against the honesty of the 
American congress. 

The second “proof” is a pretended quotation from 


ERRORS OF POPULISM. 


85 


the Bankers’ Magazine of August, 1873. According to 
Emery (2) it is as follows: 

“In 1872, silver being demonetized in France, England and 
Holland, a capital of $500,000 was raised, and Ernest Sevd, of 
London, was sent to this country with this fund, as agent of 
the foreign bondholders and capitalists, to effect the same 
object (demonetization of silver), which was accomplished.” 

The quotation as published by Weaver (4) is essen¬ 
tially the same. 

Probably not one person in a million remembers 
ever to have seen the Bankers’ Magazine of August, 
1873. It would be impossible for a person having 
access only to libraries of ordinary size to verify or dis¬ 
prove the accuracy of an alleged quotation from it. 
Mr. A. R. Spofford, librarian of congress, is authority 
for the statement that the alleged quotation cannot be 
found either in the New York or the London Bankers’ 
Magazine of August, 1873 (5). In other words, Popu¬ 
list leaders again resort to forgery to sustain their reck¬ 


less charges. 

Is it not about time for those who have been accept¬ 
ing without question the statements of Populist lead¬ 
ers to begin to read standard reliable works relating to 
our financial history, and find out how far astray they 
have been led by designing and crafty demagogues? 

The third “proof” is the affidavit.of Luckenback (0). 

This states that in 1874 Luckenback was in London, 
the intimate friend and guest of Ernest Seyd; that Er¬ 
nest Seyd, after pledging Luckenback to secrecy as long 
as he (Ernest Seyd) should live, told him that he came 
to America “in the winter of 18<2-3 with $500,000 and 
bribed congress to demonetize silver. 

There are several considerations that stamp this 
affidavit as false, and on a level with the forgeries that 
have been noticed 


86 


ERRORS OF POPULISM. 


The son of Ernest Seyd has written a letter denying 
the charge and asserting that his father was never in 
this country after 1856. The main part of the letter is 
as follows (7): 

“Sir: Statements have been circulated for some time past 
in the press of the United States that the late Ernest Seyd 
went to Washington in 1872 at the instance of a powerful 
clique of financiers with £100,000, in order to bribe members 
of congress to vote for the demonetization of silver. I trust 
you will allow me to assure you the story is an entire fabrica¬ 
tion, Mr. Seyd never having been in the states since 1856. The 
absurdity of this myth is the more apparent, as my father had 
been an ardent champion of silver, and was the first to take 
up the silver cause in England against the prevailing doc¬ 
trinism here, as his numerous works on the subject will show. 

“Surely, sir, the silver party in the states are not well ad¬ 
vised in spreading these baseless rumors and sacrificing one 
of their best friends. 

“I remain, yours truly, 

“ERNEST SEYD, 

“38 Lombard street, London, E. C.“ 

Populists claim that Mr. Seyd was here in April, 
1872—and publish the forged quotation from the Con¬ 
gressional Globe to prove it. The affidavit states that 
he came here in the winter of 1872-3. Then, according 
To Populist statement, he must have been here twice. 
And yet, Populists give the name of no man who will 
sav that he saw him on either of those visits. Thev do 
not give Seyd’s name as found in the list of passengers 
on anv ocean steamer. Thev do not refer to any hotel 
register of that date where his name can be found. 
They do not bring forward any of the many proofs that 
would reasonably be expected in such a case. 

They rely upon the affidavit of the creature Lucken- 
baek. 

They know that Ernest Seyd cannot rise from his 
grave and prove the charges false—so all they have to 


ERRORS OF POPULISM. 


87 


do is to believe tbe affidavit of Luckenback, and they 
have the most convincing evidence that silver was 
secretly, stealthily, surreptitiously, fraudulently, cor¬ 
ruptly demonetized in 1873. 

What kind of a man must Luckenback be? He 
claims to have been the intimate friend of Mr. Seyd. 
In his affidavit he states that from 1865 to 1874 he went 
to London every year, and every time he went there he 
was entertained at the home of his friend. A man 
who would needlessly, even by a true affidavit, blacken 
the memory of a dead friend and bring disgrace upon 
his family, is fit only for the company of liars and 
scoundrels. 

Surely in this matter the denial of the son is more 
worthy of belief than the affidavit of Luckenback. 

During all the period, 1853 to 1873, the silver dollar 
was worth from $1.02 to $1.05 in gold. It is absurd to 
suppose that, years before silver became the cheaper 
money at the mint ratio, money lenders in America and 
Europe formed a “conspiracy” to prevent their debtors 
from paying them in silver. 

The bill dropping the silver dollar from our list of 
coins had passed the senate on January 10, 1871, by a 
vote of 36 to 14. It had passed the house on May 27, 
1872, by a vote of 110 to 13 (8). In the name of com¬ 
mon sense, what need was there for English and Ger¬ 
man bankers to send Seyd here in the winter of 1872-3, 
to bribe congress to favor a measure that had already 
passed both houses of congress without a word of oppo¬ 
sition from a single member? Granting that bankers 
are as willing to resort to bribery as Populists claim— 
and the word of those who forge government reports 
would, of course, be accepted as conclusive on this 
point—they should be credited with having sense 


88 


ERRORS OF POPULISM. 


enough not to use bribery when there is no necessity 
whatever for it. 

Ernest Seyd was one of the most noted bi metallists 
of the world at that time, and had written several 
works in which he most strenuously urged the use of 
silver as standard money on equal terms with gold. 
He had been consulted, as an authority on finance, bv 
those in charge of the bill for the demonetization of 
silver, and had been requested to give his opinion with 
reference to the various provisions of the bill. In a 
letter to Mr. Hooper from London, dated February IT, 
1S72—about the time Populists say he was in this 
country—he wrote strongly against the dropping of the 
silver dollar from our lists of coins as the bill pro'- 
vided (9). 

Yet we are asked to believe that Mr. Seyd bribed 
congress to overthrow the monetary principles that he 
had spent the larger part of his life in upholding. 
While he lived he was regarded as a very able, honest 
man. The only discreditable thing ever brought 
against him is tin contemptible charge that Lucken- 
back brings against him after his lips are silent in 
death. 

Suppose for the moment that it is true that Mr. 
Sevd did bribe congress to demonetize silver. From 
the affidavit of Luckenback it appears that Mr. Seyd 
told him of his infamous act, not impelled by remorse, 
but merely as a matter of news, with the tacit permis¬ 
sion to Luckenback to tell the whole thing as soon as 
Mr. Seyd should die Mr. Seyd knew that the publica¬ 
tion of his infamy would stamp him in the eyes of all 
honest men as a vile hypocrite and bring odium upon 
his sons and his family. Had he no regard for his 
own reputation or that of those he would leave behind 


ERRORS OF POPULISM. 


89 


him? It is not credible that Seyd would have told 
Luckenback of his infamy without pledging him to 
eternal secrecy. Luckenback’s affidavit bears upon its 
face the indubitable marks of falsehood. 

Simply because the American people are an intelli¬ 
gent, reading people, the charge that congress was 
bribed to demonetize silver is bound to take its place 
along with the other political lies of history. 

1—Newspaper clipping. 2—“Seven Financial Conspira¬ 
cies,” p. 52. 3—“Call to Action,” p. 320. 4—“Call to Action,” 
p. 321. 5—Cong. Record, August 24, 1893, p. 795. 6—Cong. 
Record, August 21, 1893, p. 561. 7—Cong. Record, Sept. 28, 

1893, p. 1,870. 8—Lauglin’s “History of Bi-metallism,” p. 98. 
9—Cong. Record, August 22, 1893, p. 585. 


90 


ERRORS OF POPULISM. 


CHAPTER XII. 

WITH FREE COINAGE THE UNITED STATES ALONE CANNOT 

MAINTAIN THE PARITY OF GOLD AND SILVER AT 16 

TO 1. 

Populists claim that if the United States should 
establish the free and unlimited coinage of gold and 
silver at the ratio of 1G to 1, we could, independently 
of other nations, maintain the parity of the two metals 
at that ratio, and that gold and silver coins would 
freely circulate side by side with equal purchasing 
power dollar for dollar. They assert that with free 
coinage from 1792 to 1873 we had no difficulty in 
maintaining the parity of the metals at the mint 
ratio, and that our experience under free coinage in 
the past is the best evidence as to what our experience 
under free coinage would be if it should again be estab¬ 
lished. 

It is without doubt true that our experience under 
free coinage furnishes almost conclusive proof as to 
what would be the result if we should establish free 
coinage at the ratio of 1G to 1. Experience is the best 
teacher. A pound of actual test is worth a ton of 
theory in determining any practical question. 

But our financial history does not sustain this 
claim of the Populists; it indisputably proves the very 
opposite of that which they claim. 

The United States mint was established in 1792. 
Taking no notice of the small charge made by the gov- 


ERRORS OF POPULISM. 


91 


eminent for converting bullion into coin during a part 
of the time, it is correct to say that from 1792 to 1873 
we had the free and unlimited coinage of gold and 
silver in this country. 

It is the main purpose of this chapter to prove that 
during a large part of that period of eighty-one years 
the laws of this country utterly and entirely failed to 
maintain the value of gold and silver at the mint ratio. 

Alexander Hamilton, secretary of the treasury, in 
determining the mint ratio, recognized the fact that 
with free coinage it is necessary, in order to secure the 
circulation of both metals, that the mint ratio should 
Re substantially the same as the market or bullion 
ratio, and that “one consequence of overvaluing either 
metal, in respect to the other, is the banishment of 
that which is undervalued.” 

Jefferson agreed with him in this, and said: “Just 
principles will lead us to disregard legal proportions 
altogether, to inquire into the market price of gold in 
the several countries with which we shall principally 
be connected in commerce, and to take an average 
from them” (1). 

At that time none of those in charge of our financial 
affairs claimed that this government, or any other 
government, could arbitrarily establish a mint ratio 
verv different from the market ratio and maintain both 
metals in circulation. The distinction of making such 
a claim as that was reserved for the champions of free 
silver of a later day. 

Hamilton decided that an ounce of gold bullion was 
worth fifteen ounces of silver bullion; and 15 to 1 was 
established as the ratio at the United States mint. It 
could hardly have been possible for Hamilton to decide 
the matter more accurately, for in 1793, in the bullion 


92 


ERRORS OF POPULISM. 


markets of the world, an ounce of gold would exchange 
for exactly fifteen ounces of silver (4). 

Both gold and silver were an unlimited legal tender. 
Gold was coined at the rate of 24.75 grains of pure gold 
to the dollar. Our standard silver dollar has always 
contained 371.25 grains of pure silver. Up to 1853 the 
smaller silver coins had as much pure silver, in pro¬ 
portion, as the dollar. 

For several years there was no difficulty in main- 
taming the parity of the two metals at the mint ratio, 
and gold and silver circulated freely. But, owing 
largely to the greatly increased production of silver, 
it gradually became cheaper; and an ounce of gold be¬ 
came worth appreciably more than fifteen ounces of 
silver. 

When an ounce of gold could be exchanged in the 
market for more than fifteen ounces of silver, it would, 
of course, not circulate as the legal equivalent of only 
fifteen ounces of silver. The owner of gold could make 
a greater profit by disposing of it as bullion than he 
could by disposing of it as coin. If two coins of un¬ 
equal value are a legal tender for the same amount 
onlv the less valuable coin will circulate. 

With free coinage, gold and silver, in the bullion 

markets of the country, have the same value in the 

form of bullion that thev have in the form of 

«/ 

coin. This is true because it costs nothing to have 
the bullion made into coin; hence any difference 
between the value of the uncoined metal and the coined 
metal must be of the most temporary and incidental 
character. Senator Jones, of Nevada, says on this 
point: “Of course, with unrestricted coinage in any 
country, the bullion value and the mint value will in 
that country be coincident” (5). 


ERRORS OF POPULISM. 


93 


And when the bullion or market value of either 
metal varies from the value given to it by the mint laws, 
it is invariably the market value that fixes the value of 
the coin. The coin adapts itself to the bullion value, 
and is worth no more than the bullion it contains, what¬ 
ever may be its nominal value. This is why it is true 


that in Mexico, where there is the free coinage of silver 
at the ratio of 16^- to 1, Mexican coin exchanges for 
gold at about the ratio of 32 to 1. 

8>o, when at the mint ratio, gold bullion commanded 
a premium over silver bullion of 3 or 4 per cent., gold 
coins commanded a premium over silver coins of 3 or 4 
per cent., and went out of circulation. By a law al¬ 
most as powerful as the law of gravitation, the cheaper 
money drove out the dearer money. 

It is now proposed to offer clear and strong proof 
that during a large part of the period, 1792 to 1834—- 
say from 1821 to 1834—the mint laws of this govern¬ 
ment were powerless to maintain the parity of gold 
and silver at the mint ratio; that gold coin did not cir¬ 
culate at all in this country, and bore a constant pre¬ 
mium over silver at the mint ratio. 

In 1876 congress appointed a commission to in¬ 
vestigate the entire question of coinage. It is known 
as the United States monetary commission of 1876. 
Senator Jones, of Nevada, now a Populist, and gen¬ 
erally recognized as the ablest advocate of free silver 
in America, was the chairman of that commission, 
and made out the majority report, which was also 
signed by Mr. Bland, of Missouri, another noted free 
silver man (7). In that report Mr. Jones said: 

“Notwithstanding the legal relation of value between the 
two precious metals established in 1792 in this country did not 
coincide exactly with the market relation, yet they circulated 


94 


ERRORS OF POPULISM. 


concurently, with perhaps a preponderance of silver in the 
circulation until 1821. * * * Between 1821 and 1834, when 

the legal equivalency between the metals was 15 to 1, gold was 
at a premium in silver of from 5 to 7 per cent., and disap¬ 
peared from the circulation, and but little was brought to the 
mint for coinage. * * * Prior to 1834, all gold coins, do¬ 

mestic and foreign, had disappeared from the circulation in 
consequence of the premium on gold” (8). 

Thomas H. Benton, who represented Missouri in 
the United States senate from 1820 to 1850, and who 
ranked among the leading men of the nation at that 
time, giving the substance of his speech in the senate 
in 1834, savs: 

’ ~ •» 

“Thus the absence of a small note currency, and the con¬ 
stant arrival of doubloons from the lower Mississippi, de¬ 
ferred the fate of the gold currency, and it was not until the 
lapse of nearly twenty years after the adoption of the erron¬ 
eous standard of 1792 that the circulation of that metal, both 
foreign and domestic, became completely and totally ex¬ 
tinguished in the United States. The extinction is now com¬ 
plete, and must remain so until the laws are altered. * * * 

Pour secretaries of the treasury, Gallatin, Dallas, Crawford, 
Ingham, had, each in their day, pointed out the error in the 
gold standard and recommended its correction. Repeated 
reports of committees in both houses of congress had done 
the same thing. * * * Mr. B. said that the false valuation 

put upon gold had rendered the mint of the United States, 
so far as the gold coinage is concerned, a most ridiculous 
and absurd institution. It has coined, and that at large ex¬ 
pense to the United States, 2,262,717 pieces of gold, worth 
$11,852,790. And w’here are these pieces now? Not one of 
them to be seen. All sold and exported. And so regular 
is this operation that the director of the mint, in his latest 
report to congress, says that the new coined gold frequently 
remains in the mint uncalled for though ready for delivery, 
until the day arrives for a packet to sail to Europe” (10). 

Sumner, speaking of the period prior to 1834, says: 
“The fact is certain that the laws of the mint gave the 


ERRORS OF POPULISM. 


95 


country a silver currency only, and that gold was ex¬ 
ported or melted’- (11). 

Laughlin, noted for the historical accuracy of his 
statements, says: ''Certain it is that gold disappeared 
and that the United States had but a single silver cur¬ 
rency as early as 1817, and probably earlier” (2). 

Bolles, a standard financial authority, says: "For 
several years after establishing the mint and regulating 
the coinage, the market value of gold and silver abroad 
and at home, corresponded with the mint valuation, so 
that both metals circulated at the legal ratio. Neither 
one was worth for exportation more than the other. 

*■ Of the two metals it was apparent, even be¬ 
fore the war of 1812, that gold was more desirable for 
exportation than silver. * * * The legal valua¬ 

tion did not correspond with that of the market. Its 
valuation was too low compared with silver, and con¬ 
sequently gold tied to foreign countries. Year after 
year the current set away from our shore” (13). 

The report of the director of the mint for January 
1,1825, says: "Deposits of gold have, for the last three 
years, been inconsiderable. While gold bullion is in 
demand at a premium on its standard value for ex¬ 
portation as a remittance, instead of bills at the current 
exchange, no adequate inducement exists to bring it 
to the mint if its value can be otherwise satisfactorily 
ascertained. It is obvious that if coined and issued 
under such circumstances it can not be retained in 
circulation” (15). 

The report of the director of the mint for January 
1, 1827, speaking of the operation of the mint during 
1826, says: 

“The amount of gold deposits has been less than that of 
the year 1825 by about $64,000, a result attributable, probably, 


90 


ERRORS OF POPULISM. 


to the higher premium on gold, in bullion, and in every de¬ 
scription of coin, which has distinguished the last year. This 
premium has varied from 4 to 6 per cent, on gold coins. 
* * * The diminished coinage of gold is, therefore, the less 

to be regretted, since, under existing circumstances, it cannot, 
when coined, be retained in circulation” (16). 

The director of the mint in 1833 reported that from 
1821 to 1832 the premium on gold ranged from 2 to 7 
per cent. (17). 

The law of 1834, which was supplemented slightly 
by the law of 1837, was passed for the express purpose 
of bringing gold back into circulation. The mint ratio 
was changed to 1(> to 1, at which ratio the gold dollar 
contains 23.22 grains of pure gold. The results of the 
law were immediately apparent; and gold coins were 
soon flowing in abundance through all the channels 
of trade. 

But the new law undervalued silver; sixteen ounces 
of silver were worth somewhat more than one ounce of 
gold. Hence the tendency was to sell silver as bullion 
rather than to use it as money. After California and 
Australia began to produce gold in vast quantities it 
became cheaper as compared with silver, and our mint 
laws could not prevent it. As the premium on silver 
bullion over gold bullion at the mint ratio increased, 
the premium on silver coins over gold coins increased. 
By 1853 the silver dollar disappeared entirely from cir¬ 
culation, and even the smaller silver coins were to a 
great extent gathered up and sold as bullion. 

In 1853 congress passed a law reducing the amount 
of pure silver in the smaller silver coins nearly 7 per 
cent., and made them a legal tender for only $5. The 
right of free coinage as to these coins was also taken 
awav. It was provided that the government should 
purchase silver bullion and coin these subsidiary pieces 


ERRORS OF POPULISM. 


97 


as thev were needed for change over the country, and 
exchange them for gold coins at par (18). 

Up to 1857 some foreign silver coins were a legal 
tender in this country; but none of them were a legal 
tender which did not have more pure silver in them 
than the corresponding American coins (19). There¬ 
fore, these coins were driven out of circulation, because 
they were undervalued at the mint, sooner than the 
American coins were driven out of circulation for the 
same reason. 

As soon as silver coins bore a premium over gold 
coins of 2 or 3 per vent., they went out of circulation, 
and the gold dollar became the practical standard of 
value. The only silver coins that circulated were the 
subsidiary pieces, coined only by the government, and 
at the ratio of 14.95 to 1, and some foreign coins so 
much worn and clipped that their value was far below 
that required by the ratio of 10 to 1. 

Although the owner of silver bullion could have it 
coined into full legal tender money—dollars—on the 
same terms that the owner of gold bullion could have 
his gold coined, from 1853 to 1873, inclusive, only $5,- 
524,348 of silver was thus coined; while during the 
same time $615,312,000 of gold was coined. During 
that period the world’s production of gold was only 
two and one-lialf times the production of silver; and 
this country’s production of gold was only six times 
that of silver—yet, 111 times as much gold as silver 
came to our mints for free coinage. And 1 he few silver 
dollars that were coined were exported or used for 
other purposes than money. 

It is now proposed to offer clear and strong proof 
that during a large part of the period, 1834 to 1873— 
say from 1853 to 1873—the mint laws of this govern- 


E r —7 


98 


ERRORS OF POPULISM. 


ment were powerless to maintain the parity of gold 
and silver at the mint ratio, and that no silver was 
used as money in this country at the ratio of 16 to 1. 

Senator Jones, as chairman of the monetary com- 
mission, said: “After the change made in 1834 in the 

legal relation of value between the two metals, they 
circulated concurrently until about 1850, although on 
account of the undervaluation of silver by the law of 
1834, there was a constant tendency to an exportation 

of silver in the settlement of foreign balances. * * * 

0 

Between 1850 and 1873, whenever payments were made 
in coin, gold was used because it was the cheaper of 
the two metals, just as silver was used for a similar 
reason between 1821 and 1834” (9). 

Sumner, speaking of the law of 1834, says: “As 
before no one would pay a debt with gold dollars, so 
now no one would pay a debt with silver dollars. Sil¬ 
ver went out of circulation and became the better metal 
to export, while for the same reasons gold became the 
better remittance this way. The onlv silver which 
could circulate here was that which was worn or 
clipped until it was not worth more than silver was 
rated at in our coinage.” Of the law of 1853 he says: 
“The silver dollar was not altered, but it had disap¬ 
peared and ceased to be a coin of the country” (12). 

Bolles speaks of the law of 1834 as follows: “The 
new valuation soon exposed the fact that the valuation 
of silver was too low; consequently it disappeared from 
circulation. Later the golden riches of California and 
Australia were discovered. The effect of these dis¬ 
coveries was to diminish the value of gold; and, of 
course, the silver shrank still farther out of sight” (14). 

Laughlin makes this statement: “At no time after 
the act of 1853 until the civil war was the silver dollar 


ERRORS OF POPULISM. 


99 


of 4124 grains equal to less than 103 or 104 cents of our 
gold coins, and consequently it was never seen in cir¬ 
culation” (3). 

Thomas Corwin, secretary of the treasury, in his 
report of January 15, 1853, speaking of the disappear¬ 
ance of silver coins in consequence of the premium on 
silver, says: 

“Tne inconvenience arising from the scarcity of silver coin¬ 
age still continues, and to such an extent as calls loudly for 
some legislative action to remedy the evil. * * *If, as I 
believe is the fact, this difference in the relative value of the 
two metals arises from the immense and increased supply of 
gold which has been furnished from California and Australia, 
tnere can be but little doubt such difference will continue to 
increase. This state of things has banished almost entirely 
from circulation all silver coin of full weight; and what little 
remains in the hands of the community consists principally 
of worn pieces of Spanish coinage of the fractional parts of a 
dollar, all of which are of light weight, and many of them 10 
or 20 per cent, below their nominal value. * * * The nat¬ 

ural and inevitable consequences of the premium which silver 
now bears have been to establish, practically, gold as the 
only legal tender” (20). 

James Guthrie, secretary of the treasury, in his re¬ 
port of December 6, 1853, speaking of the gold on hand 
with which to purchase silver bullion to coin into sub¬ 
sidiary pieces, says: “This enabled the mint to give 
gold, which circulated as money, for silver, that was 
out of circulation because of the premium upon 
it” (22). 

Secretary Guthrie, under date of April 28, 1850, 
reported with reference to the undervaluation of gold 
bv the ratio of 10 to 1: 

4 / 

“Consequently, gold remained in the country, and silver 
became an article of export, and rapidly disappeared, and now 
the silver dollar coined at the United States mint under the 


100 


ERRORS OF POPULISM. 


act of 1792, is worth, at the same mint, a premium of from 4 
to 5 per cent. To remedy this, in part, the act of February 
21, 1853, was passed” (21). 


James Pollock, director of the mint, in his report 
of October 10, 1861, states that at that time the silver 
dollar was worth nearly $1.04 in gold, and says: “Sil¬ 
ver dollars are no longer to be had, or are very 


rare” (23). 

Again, in his report of October 21,1863, Mr. Pollock 
says: “The dollar is our unit of value, but the value 
of the gold and silver dollar, under existing laws, is 
not the same. * * * The gold dollar should be, 

by law, adopted as the unit value of our money” (24). 


On April 9, 1872, Mr. Hooper, of Massachusetts, in 
a speech in congress in favor of the bill demonetizing 
silver, which became a law in 1873, said: “The silver 
dollar, which by law is now the legally declared unit of 
value, does not bear a correct relative proportion to the 
gold dollar. Being worth intrinsically about $1.03 in 
gold, it cannot circulate concurrently with the gold 


coins. 




On tin 1 same dav Mr. Kellev, of Pennsvlvania, said: 
“By a mistake in our law it has become impossible to 
retain an American silver dollar in this country, except 
in collections of curiosities” (6). 

The facts and evidence here given prove beyond 
the reach of intelligent contradiction that those are 
greatly mistaken who claim that under free coinage 
this government had no difficulty in maintaining the 
parity of gold and silver at the mint ratio and making 
our gold and silver dollars of equal value. 

It has been shown that for years at a time $5 in gold 
was worth from $5.10 to $5.35 in silver; and that, later, 


ERRORS OF POPULISM. 


101 


for many continuous years, $5 in silver was worth 
from $5.10 to $5.25 in gold. 

Our financial history clearly shows that we main¬ 
tained the parity of the two metals only so long as our 
mint ratio was about the same as the market or bullion 
ratio, and that our mint laws could not prevent the 
bullion ratio from differing substantially from our 
mint ratio. 


The market ratio of gold and silver is about 22 to 1. 
The claim that the United States alone can, with free 
coinage, maintain the parity at the ratio of 16 to 1 
finds no support either in history or in reason. At that 
ratio gold would be undervalued nearly 50 per cent. 
Prior to 1834 gold went out of circulation when it was 
undervalued only 3 per cent, and later, silver went out 
of circulation for a similar reason. Surely, then, there 
is no ground for hope that we could keep gold in circu¬ 
lation when undervalued nearly 50 per cent. 

If gold went out of circulation the silver dollar 
would be, practically, our standard of value. And the 
silver dollar would have but about half the purchasing 
power of the gold dollar it displaced; for, as has been 
stated, with free coinage the coin is worth no more than 
the bullion it contains; and in all civilized countries the 
silver in our silver dollar is worth only about 51) cents 


in gold. 

If we are to give silver free coinage at the old ratio, 
let us do it with our eyes open, and knowing the re¬ 
sults that will inevitably follow. Let us do it knowing 
that it will place us practically upon a silver basis, 
with the value of our measure of value suddenly dimin¬ 
ished nearlv one-half. 

•j 

If we could, by a process extending through a num¬ 
ber of years, gradually go on to a silver basis, the 


102 


ERRORS OF POPULISM. 


change would not be so disastrous. But, if we pass a 
law giving silver free coinage at the ratio of 16 to 1 > 
we will go on to a silver basis just as soon as the light¬ 
ning flashes the news over the country that the law 
has been passed—if the change has not been already 
made in anticipation of the passage of the law. The 
boat riding below Niagara Falls may be about as good 
as it is above; but the experience of going over the falls 
is one that can well be dreaded. 

1—“History of Bi-Metallism in the United States,” p. 11. 
2—Same, p. 30. 3—Same, p. 86. 4—“Coin’s Financial School,” 
p. 34. 5—Cong. Record, 53d congress, special session, Vol. 
25, part 3, appendix, p. 617. 6—Same, April' 9, 1872, pp. 2,305- 

2,311. 7—Speech in senate by Senator Jones, May 12, 13, 
1890, printed in book form, p. 18. 8—“Reports of Commit¬ 
tees,” Nos. 157 to 219, 2d session 44th congress, 1876-77,” re¬ 
port of monetary commission, pp. 10, 87, 90. 9—Same, pp. 10, 

88. 10—“Thirty Years’ View,” Vol. 1, pp. 442, 443. 11— 
“History of American Currency,” p. 108. 12—Same, pp. 109, 110, 
187. 13—“Financial History of the United States,” Vol. 2, 
pp. 502, 503. 14—Same, p. 511. 15—“American State Papers,” 
finance, Vol. 5, p. 226. 16—Same, p. 619. 17—“Annual Cyclo- 
peuia,” 1878, p. 146. 18—“Coinage Laws of the United 
States, 1792 to 1884,” p. 27. 19—Same, p. 25. 20—“Report on 
the Finances, 1851-52,” p. 11. 21—Same, 1855-56, p. 666. 22— 
“Finance Report,” 1853-4, p. 6. 23—Same, 1861, p. 63. 24—Same, 
1863, p. 191. 


ERRORS OF POPULISM. 


103 


CHAPTER XIII. 

FREE COINAGE AT 16 TO 1 BY THE UNITED STATES ALONE 
MEANS SILVER MONO-METALLISM. 

At tlie ratio of 16 to 1 the silver dollar contains 
371.25 grains of pure silver. There are 480 grains in 
an ounce, hence an ounce of silver coined at that ratio 
makes $1.29. 

Therefore, if we should coin silver free at the ratio 
of 16 to 1, silver bullion in this country would always 
be worth $1.29 per ounce in silver coin. 

And a person would not give more gold or wheat 
for a certain amount of coined silver than he would 
tor the same amount of silver uncoined; for he could, 
with his gold or wheat, buy the uncoined silver and 
have it made into coin free of charge. This is but 
another statement of the fact that should always be 
borne in mind when considering the question of coin¬ 
age; namely, that with free coinage, in the bullion 
markets of the country the value of the uncoined metal 
is the same as the value of the coined metal—the coin 
is worth no more than the bullion it contains. 

In all commercial countries the value of bullion is 
practically the same. It cannot be greater in one 
place than it is in another place by more than the cost 
of transportation between the two places, and it is 
usually very much less (1). 

There is no dispute between the friends and the foes 
of free coinage that the effect of giving free coinage to 
silver at the ratio of 16 to 1 would be to fix the value of 



104 


ERRORS OF POPULISM. 


silver bullion all over 1 lie world at substantially $1.29 
per ounce in silver coin. 

Senator Jones, of Nevada, says: 

“When silver becomes $1.29 here it becomes $1.29 every¬ 
where. * * * Does the senator suppose when the govern¬ 

ment of the United States gives $1.29 an ounce for silver that 
any one can get an ounce of the metal for any less than that 
amount anywhere in the world?’’ (2). 

Mr. Bartine, one of the ablest advocates of free 
silver, said in a speech in congress: 

“What we propose by free coinage is simply to raise the 
price of the uncoined and uncoinable bullion to $1.29. * * * 

The evidence is simply conclusive that -bullion is of substan¬ 
tially the same value in all the bullion markets of the 
world” (3). 

Senator Teller, of Colorado, said: 

“If the government of the Unted States should open its 
mints, and say, for every ounce of silver brought to us we will 
pay $1.29, who would sell their silver anywhere in the world 
for less than that?” (4). 

After having thus, by giving silver free coinage at 
the ratio of 16 to 1, fixed the value of the world's silver 
bullion at $1.29 in our silver coin, wliat would be its 
value in our gold coin? 

If there was a parity—an equality of value—be¬ 
tween gold and silver, silver bullion would be worth 
$1.29 per ounce in gold coin as well as in silver coin. 

At present silver bullion is worth only 67 cents per 
ounce in gold. 

M ould the establishment of free coinage at the 
ratio of 16 to 1 by this country alone cause silver bul¬ 
lion in this country, and practically all over the world, 
to advance in price to $1.29 per ounce in gold—an ad¬ 
vance of nearly 100 per cent? If it would not free 
coinage would inevitably result in practical silver 
monometallism. 



ERRORS OF POPULISM 


105 


It is tlie purpose of this chapter to show that such 
action on the part of this country alone would not thus 
advance the price of silver. 

In 1871 silver bullion was selling for $1.32 per ounce 
in gold; and an ounce of gold bullion would exchange 
for about 15^ ounces of silver bullion (5). As has been 
stated, silver bullion now sells for 67 cents per ounce 
in gold, and an ounce of gold bullion exchanges for 
nearly thirty-two ounces of silver bullion. 

What has caused this tremendous decrease in the 
value of silver as compared with gold? If we can 
determine this correctly, we can then intelligently de¬ 
cide whether free coinage, at the ratio of 16 to .1 by this 
country alone, would be a cause sufficiently powerful 
to raise the value of silver to $1.29 in gold, and cause 
an ounce of gold bullion to exchange for sixteen ounces 
of silver bullion — without which advance in value 
there could be no parity between the metals. 

The greatest cause of the low price of silver is its 

rejection as a money metal by the leading nations of 

the world. In this discussion reference is made onlv 

«/ 

to money of full debt paying power, not to subsidiary 
silver coins of limited legal tender quality used for 
change. 

The value of silver bullion, like all other products 
of human labor, is governed absolutely by the great 
law of supply and demand. The supply remaining* 
the same, if there is a decreased demand for any article 
it is bound to become cheaper. If the supply increases 
while the demand decreases, the cheapening result is 
all the greater. All will admit that if half the people 
who use flour as food should cease using it flour would 
fall tremendously in value. 

Exactlv so it is with silver. Its greatest use is for 


106 


ERRORS OF POPULISM. 


money. It is this use that creates the greater part of 
the demand for silver, and it is the demand for silver, 
operating against the supply, that gives silver its 
value. 

One nation after another has rejected silver as 
a money metal. In 1871 all the mints of continental 
Europe, except those of Portugal and Turkey, were 
open to the free coinage of silver into full legal tender 
money; and the mints of at least Holland, Austria and 
Germany were closed to gold (6). 

To-day not a mint in all Europe is open to the free 
coinage of silver (7). 

Let us see the order in which the nations relegated 
silver to a secondary place as money. 

1865—At the formation of the Latin Union Italy,. 
Switzerland and Belgium insisted strenuously upon 
the adoption of the gold standard, but were overruled 
by France (8). This union was an international bi¬ 
metallic league. The states of the church joined it in 
1S66; Greece and Koumania in 1867. In 1785 France 
adopted the ratio of 15^ to 1. It is the ratio of the 
Latin union and of Europe generally. 

1807—The international monetary conference met 
at Paris for the purpose of discussing a uniform sys¬ 
tem of coinage throughout the world, and was attended 
by delegates from nineteen countries. With the ex¬ 
ception of the delegates from Holland, the delegates 
unanimously “recommended the establishment of the 
single standard of gold, with silver as a subsidiary 
minor coin” (9). 

1871—Germany prohibited the coinage of silver, 
and estalislied the coinage of gold. She did not de¬ 
monetize any of her silver coins. The future policy 
of the government with reference to silver was plainly 


ERRORS OF POPULISM. 


107 


indicated Ivy the sixth section of the law passed at 
that time—“Until the enactment of a law for the re¬ 
demption of the large silver coins, the making of gold 
coins shall be conducted at the expense of the em¬ 
pire” * * * (10). 

1872— The Scandinavian Union, composed of Nor- 
wav, Sweden and Denmark, “entered into a monetarv 
treaty, adopting gold as the sole standard of value and 
making silver subsidiary, to be coined only for change 
purposes” (7). These states threw a large part of their 
silver coins on the market as bullion. 

1S73—The United States dropped the standard sil¬ 
ver dollar from our list of coins, and adopted the gold 
dollar as the unit of value. No silver coins were de¬ 
monetized by this law (12). 

1873— Germany limited the legal tender quality of 
her silver coins to $5, and began to sell her silver coins 
as bullion. She sold vast quantities of these, and at a 
loss of nearly 10 per cent, from their face value (13). 

1874— In January the Latin Union limited the coin¬ 
age of silver in order to keep gold in circulation. Sil¬ 
ver, being cheaper than gold at the mint ratio, was 
being presented in immense quantities for coinage. 
In 1871-2 only 5,000,000 francs’ worth of silver was 
presented at the French mint for coinage; in 1873 154,- 
000,000 francs’ worth was thus presented. So it was 
at the mint of Belgium (14). 

1874— In June the United States limited the legal 
tender quality of all silver coins to $5 (12). 

1875— Holland prohibited the coinage of silver, and 
adopted the gold standard. 

1870—France stopped the coinage of silver and has 
coined none since. 


108 


ERRORS OF POPULISM. 


1876—Russia prohibited the coinage of silver, ex¬ 
cept for Chinese trade. 

1878—Spain prohibited the free coinage of silver. 

1878— The Latin Union stopped the coinage of 
silver. 

1879— Austria-Hungary prohibited the free coin¬ 
age of silver, and has since adopted the gold standard. 

1890—Roumania adopted the gold standard and 
threw a lot of silver coins on the market as bullion. 


1893—India, which for many years had been coin- 

• * 

ing silver at the average ratemf $36,000,000 per year, 
stopped the coinage of silver. 

We are the only nation that has since 1873 taken 
any action looking to a larger use of silver as money. 
Absolutely, and also in proportion to the world's pro¬ 
duction of silver, we have used a vastly larger amount 
of silver money than we did before, and hence have 
made a greater demand for silver, and hence have done 
more to keep up its value. 

From 1793, when our coinage began, up to and in¬ 
cluding 1873, our total silver coinage was $147,488,- 
898.30—an average annual coinage of $1,820,850. From 
1874 to 1893 inclusive, our total silver coinage was 
$525,220,370—an average annual coinage of $26,201,- 
185 (15). 


From 1853 to 1873 inclusive we coined into legal 
tender money only $5,524,348 of silver. To say noth¬ 
ing of $136,000,000 of treasury notes now outstanding, 
based upon silver bullion, and redeemable in coin, we 
have, since 1873, coined into full legal tender money 
$426,289,916 of silver. 

However, had we not demonetized silver in 1873, 
we would since then have made a greater demand for 
and use of silver as money than we have; and remone- 


ERRORS OF POPULISM. 


109 


tization would tend in slight degree to advance the 
price of silver. 

Populists say that the demonetization of silver is 
the sole cause of its depreciation. Grant this for the 
moment. Demonetization bv whom? Not by the 
United States alone. If our demonetization of silver 
tended to lower its price, its demonetization by so many 
otner countries, some of which threw their silver coins 
on the market as bullion, also had that effect. Ger¬ 
many alone thus sold silver coins to the amount of 

•j 

about $150,000,000. 

If this were the only country that has lowered the 
price of silver by demonetizing it, then remonetization 
by this country alone, other conditions remaining the 
same, would restore its value. But we see from the 
above chronological statement that it has required the 
demonetization of silver by nations with an aggregate 
population of 600,000,000 to drag the price of silver 
down to where it is to-day; and the full effect of all 
this hostile action has not yet been felt. Were it not 
for the hope of legislation favorable to silver it would 
sink much lower in price. The countries named above 
do a large part of the business of the globe, and largely 
determine the value of everything used in civilized 
countries. With so much of the world pulling the 
price of silver down we alone cannot lift it up to its 
former price. This country alone cannot make a de¬ 
mand for silver as great as the demand that would 
have been made by the 600,000,000 had Ihey not de¬ 
monetized silver; therefore our demand alone cannot 
bring the price of silver up to where it was formerly. 

But the preference on the part of the leading com¬ 
mercial nations of the world for gold rather than silver 


110 


ERRORS OF POPULISM. 


as money is not tlie only cause for the depreciation of 
silver in value, as compared with gold. 

Another cause is the constant and enormous in¬ 
crease in the production of silver. 

The following table shows the world’s average 
annual production of gold and silver, in ounces, from 
1851 to 1894, in periods of five years, except the last 
period, which is of four years: 


Period. Gold. Silver. 

1851-1855 .6,410,324 28,488,597 

1856-1860 . 6,486,262 29,095,428 

1861-1865 . /.5,949,582 35,401,972 

1866-1870 . 6,270,086 43,051,583 

1871-1875 .5,591,014 63,317,014 

1876-1880 .5,543,110 78,775,602 

1881-1885 .4,794,755 92,003,944 

1886-1890 .5,461,282 108,911,431 

1891-1894 .7,434,363 155,522,638 


Every intelligent man knows that when the mines 
of California and Australia vastly increased the pro¬ 
duction of gold it became cheaper, measured by silver, 
than it was before. 8o it is now with silver. If, dur¬ 
ing the past twenty-five years, silver had been, in the 
estimation of the world, as desirable for money as it 
was before, and if it had been admitted to the mints 
as freely as gold, its increased production would prob¬ 
ably have caused, only a slight decrease in value as 
compared with gold. But, coupled with the decreased 
demand for silver, its increased production has con¬ 
tributed powerfully +o its fall in value. 

The author has no hesitancy in asserting that he 
has given the two chief causes for the low price of 
silver; namely, the fact that nations with an aggregate 
population of over 600,000,000 have, since 1871, shut 
off, almost entirely, their demand for s ; lver as money, 
and the fact that for the last forty-five years there has 











ERRORS OF POPULISM. 


Ill 


been a vast increase in the production of diver with 
no corresponding increase in the production of gold. 

If this is so, then it is utterly unreasonable to be- 
lieve that the unfavorable effect upon the price of sil¬ 
ver produced by these powerful causes could be coun¬ 
teracted and nullified by the favorable effect upon the 
price of silver produced by its remonetization by this 

country alone. 

*/ 

In 1S57 Germany and Austria demonetized gold 
and established silver as the standard of value (17). 
How t much did their action increase the gold price of 
silver bullion? One hundred per cent.? No. Thirty 
per cent.? No. Three per cent.? No. Then why 
should remonetization of silver by the United States 
greatly increase the gold price of silver bullion? 

In 181G England demonetized silver and estab¬ 
lished the gold standard. How much did her action 
increase the price of gold bullion? “Coin” says that 
“the parity of the two metals was not affected” by 
England’s action (18). Then why expect our remone¬ 
tization of silver to greatly increase its price in gold? 

The fact is that the effect upon the value of either 
metal resulting from its remonetization or demonetiza¬ 
tion by a single country is slight. The causes regu¬ 
lating the relative values of gold and silver are world¬ 
wide, and far more powerful than the influence of any 
one country. 

Since our remonetization of silver would but slight¬ 
ly advance the price of silver bullion, the result of free 
coinage would be, practically, silver mono metallism, 
with our standard of value decreased about one-half. 

The sudden change from the gold basis to a prac¬ 
tical silver basis with the silver dollar, worth about 50 
cents in gold, as the standard of value, would without 


112 


ERRORS OF POPULISM. 


doubt produce a financial crash such as has never been 
known in our history. The curr 

be contracted by the withdrawal of more than half a 
billion dollars of gold from circulation. There would 
probably be a general run on the banks of the country, 
started by depositors who desired to obtain gold and 
continued by those glad to receive any kind of money 
before the banks closed their doors and went into the 
hands of receivers. There would be a universal un¬ 
settling of values and paralysis of business. 

Laboring men would suffer the most of all. Tlufse 
who sold them goods would at once advance the price 
about 50 per cent, in order to protect themselves 
against loss because of the cheaper money in which 
they were paid; but those who employed them would 
be slow to advance their wages. It is an undisputed 
fact that in a period of rising prices the price of labor 
does not rise as rapidly as the price of commodities. 
Vast numbers of men are under contract to work for a 
certain time for a given number of dollars per week or 
per month. Provided the general stagnation of busi¬ 
ness did not throw them out of work altogether, these 
would be paid as many dollars as they contracted for 
—but the dollars would be cheaper dollars. 

In 181)4 there were in this country 4,777,087 de¬ 
positors in the savings banks, with an average deposit 
of |365.80 each. There were 1,925,340 depositors in 
the national banks, of whom 1,724,077 had less than 
81,000 each. There were 1,436,038 depositors in state 
and private banks and loan and trust companies. In¬ 
stead of being paid as good money as they had paid to 
these corporations, all these depositors would be paid, 
if at all, in silver dollars—thus losing about half the 
value of their deposits. So it would be with the bene- 


ERRORS OF POPULISM. 


113 


ficiaries of the millions of life insurance policies more 
or less paid up. Nine hundred and seventy thousand 
pensioners would have their pensions reduced nearly 
50 per cent, in value. Corporations and capitalists 
that have loaned money have made themselves safe by 
stipulating that they shall be paid in gold. The great 
loss would fall mainly upon those least able to bear it, 
though all would suffer more or less in the general 
ruin. Our credit abroad would be injured for many 
years to come. 

To say nothing of the fearful financial disaster 
caused by the sudden change from the gold basis to the 
silver basis, it is far'better to have gold as our stand¬ 
ard of value, with a large amount of silver in use, than 
to have silver as our standard of value, with no gold 
coin in use. 

1—“Coinage Laws of the United States, 1792 to 1894,” p. 105; 
Report Director of Mint, 1893, p. 40. 2—Cong. Record, Vol. 25. 

part 3, appendix, p. 625. 3—Cong. Record, March 24, 1892, p. 
2,512. 4—Cong. Record, Vol. 25, part 3, appendix, p. 361. 5— 
Statistical Abstract of United States, 1894, p. 279. 6—Senators 

Jones and Cockrell, Cong. Record, Vol. 25, part 3, appendix, pp. 
252, 651; Stewart, Cong. Record, September 5, 1893, p. 1,233. 
7—Mr. Leech, ex-director of mint, Cong. Record, August 30, 
1893, p. 1,060. 8—Report Monetary Commission, 1876, p. 16; 
Laughlin’s “History of Bi-Metallism,” p. 148. 9—Senator 
Cockrell, Cong. Record, Vol. 25, part 3, appendix, p. 258; 
Laughlin, p. 153. 10—Report Monetary Commission, 1876, p. 

17; Laughlin, p. 137. 12—“Coinage Laws,” etc., pp. 36, 59. 

13— Laughlin, p. 138; Cong. Record, August 30, 1893, p. 1,060. 

14— Laughlin, p. 155. 15—Report Director of Mint, 1893, pp. 

303, 307. 17—Speech of Senator Jones in senate, May 12, 13, 
1890, printed in pamphlet form, p. 20. 18—“Financial 
School,” p. 142. 


NOTE On page 69 instead of $150,000 000,000, read $150 000,000. 













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